What is the impact of this lockdown?
India is an economy of 1.3 Billion people where 300+ Million people are living on less than one dollar per day earnings. So, a population as big as that of the entire USA is totally dependent on daily wages and menial jobs in factories, offices, construction & infra projects, agriculture or fisheries. Apart from these 300 Million, another 90 Million people are marginal workers who earn only 6 months in a year due to the nature of their work. 110 million are indulged in agricultural labor and household/industry labor of 17 million. This means, close to 500 million people in India are at immediate risk of unemployment, inability to even earn enough money for their essential needs and large sectors that depend on these workers are getting affected financially due to their inability to generate work products.
One month of lockdown across India can destroy nearly 10% of our GDP!
Choosing between a rock and a hard place!
While the threat of an imploding large economy looms over India, there is also the threat of an epidemic explosion that can quickly overwhelm the already-overloaded healthcare system in the country. An epidemic not only takes lives but also adds other costs to the economy such as:
- Increased payouts for the insurance industry that can quickly overwhelm them
- Raising the cost of healthcare and the potential breakdown of the healthcare system
- Loss of breadwinners in poor and middle-class households will, in turn, lead to families getting impoverished and affect the education of kids
- Increased tensions and civil unrest between communities/colonies with higher and lower infection rates
- Increased downtime of workforce that leads to lower productivity and higher losses for factories, services industries and back office operations
The option of continuing or lifting the lockdown is not a simple one!
Steps to recover and relax the lockdown!
- Extend lockdown – but fix a date for lifting the lockdown! This is the most important thing for the government to consider right now. Typically, a date such as 1st May 2020 can be chosen to restart the economic engine (with the symbolic Labor Day as a beacon of hope to revitalize the workforce).
- Isolate the localities with hotspots of infection and continue the lockdown there but allow the other localities to restart their regular social and economic activities. This helps to focus resources such as police force, logistics and healthcare better in the areas where maximum impact can be delivered to prevent an epidemic outbreak.
Predictability makes it easier for businesses to plan their downtime and steps to restart. So, fix a date for lifting the lockdown!
- Impose strict regulations for all businesses that are restarting their activities. Every business should provide sanitizers, gloves, masks and encourage distancing of 6 feet between the workers while they go about their regular work.
- Public transportation is a major problem center since it is needed for the low earning workforce, while it also becomes the easiest point to acquire an infection. So, either public transport should strictly regulate the number of people per vehicle and also enforce disciplined queueing in bus stops & metro stations such that enough distance can be maintained between passengers who should also strictly wear masks and gloves while traveling. While this may add some stress on the buses and metros, it is still better than completely stopping these services or allowing uncontrolled usage of the same. This way, transport workers and the public both get benefited despite some amount of difficulty to be suffered on both ends.
- Businesses with a high employment base and large facilities such as offices, factories, warehouses, etc. should create temporary isolation chambers – to quickly isolate any suspected employees – and avoid that air circulating back via a central AC to the entire facility.
- Eateries and restaurants should be allowed to restart their businesses but the health department should ensure a self-QC based on a declaration by each eatery online where they can provide proof of following health regulations such as usage of masks, gloves, sanitizers, etc. by staff and enforcing distancing between customers.
- The transport industry is the biggest sufferer of this lockdown and drivers who have taken loans for their cars or depend on monthly wages for their livelihood are severely impacted. So, restarting the cabs, autos and travels between cities will help lakhs of drivers and their families across cities. Again, each driver should provide an online self-QC where they show photos of them wearing masks and providing sanitizers in the car for passengers who can use them before handing over money.
- Push for digital payments and online transfers. While online payments got a major boost because of the democratization days, they were quickly subsumed by the cash economy since most small businesses wanted to revert to their old model of running businesses using cash. This currency exchange can be a potential means for infections to spread and quickly revert the benefits given by the recent lockdown. So, every small and big business should be advised to strictly follow the online-only payment model for their own benefit and for the benefits of the public.
- Protect the workers who may lose jobs due to the companies that are experiencing a slowdown or financial distress caused by the lockdown.
- Special lending guidelines need to be provided to the banking sector by the RBI and lower cost of credit should be provided to businesses to help them survive the recession that may follow the lifting of the lockdown in the next 6 – 9 months.
While these steps are not necessarily sufficient to regain traction of our economic growth, these are essential steps to ensure that the lockdown will not lead to a long term recession and economic depression for a country like India which may already take a hit due to the global economic recession due to high rates of infection in some of the largest economies.