Leveraging COVID-19 for a Better Tomorrow
Amb Satish Chandra, Vice Chairman, VIF

As we are about to enter lockdown 4.0 it is an opportune moment to evaluate how India has handled the Covid-19 challenge so far, to assess the evolving situation both in terms of the progression of the disease and its ramifications, and to contemplate a national strategy designed to address the double whammy of Covid-19 and economic stagnation confronting us. Such a strategy should be based upon the lessons learnt from Covid-19, the prevailing international climate, a clear knowledge of our strengths and weaknesses and the vision for a better and stronger India.

In terms of handling the Covid-19 challenge, India has not done badly as compared to many other countries. The burden of the disease in India as well as its doubling and mortality rate is lower than in most large countries. This is largely due to the timely action taken by the Government including screening, tracking, quarantining, and testing of suspects, ensuring availability of critical medical supplies as well as facilities, and providing quality medical care to those in need. Above all, the Modi government did not for a moment hesitate in resorting to unpopular measures like the three stringent lockdowns essential to stem the exponential growth of the disease. In the absence of the lockdowns India would have been engulfed by millions of Covid-19 cases by now. Finally, though itself badly hit by the pandemic, India must be credited with having assisted scores of countries, developed and developing, with medical supplies and equipment as well as personnel. It also displayed the vision of trying to cobble together a cooperative response to the pandemic in the G-20, SAARC, and NAM.

India should, however, have been able to do much better in handling this crisis. Had our lockdowns been rigorously observed our current case load would have been substantially lower and would certainly not have swelled 100 fold from around 600 on 25 March to a level of 60000 on 8 May. With the case load doubling every 10 days as at present Indian will have over a million patients by end June. Indeed, according to an epidemiologist in Michigan the case load could go as high as three to five million in July.

The Indian lockdowns were not as well observed as they should have been with social distancing becoming a casualty due to several factors, some unavoidable and some not.

Amongst the unavoidable factors may be listed the fact that social distancing is by and large foreign to most Indians and the fact that millions in India, particularly in our metropolitan centres, live cheek by jowl in highly congested clusters

Amongst the avoidable factors which made a mockery of social distancing were the Tablighi Jamaat meetings in Delhi in March 2020, the outpouring into the streets in state after state of hundreds of migrant workers wanting to go home, and the huge gatherings outside liquor vends after the partial lifting of the lockdown. All these were preventable. Their occurrence reflects poorly on our administrators and the police force.

Of the aforesaid issues the handling of the migrant workers was the most unfortunate. The insistence that the workers stay put was based on sound logic not only to ensure compliance with the lockdown but also to minimise the disruption of normal commercial activity post the lockdown. Regrettably, the concerned state authorities came up woefully short in providing the migrant workers with the incentives to stay on, by way of wages, shelter and food compelling the latter to take to the streets in large numbers during the lockdown. If the conditions for the migrants to stay put could not have been created it would have been wiser to have arranged their movement back to their homes in an orderly fashion as is now being done.

In contrast to the inept handling of the migrant workers in India greater vision has been shown in undertaking the evacuation of Indian expatriates abroad. It is also fitting that while the expatriates are being billed for their evacuation migrant workers are not being charged as they cannot afford to pay. The evacuation of Indian expatriates could entail the movement of as many as one million people, a much larger number than those evacuated after Iraq's invasion of Kuwait, and second only to the seven million who had migrated to India in 1947-48.

While the lockdowns have kept the pandemic in check they have exacted a huge economic price. Economic activity in the country has been brought to a near halt and India will at best experience marginal GDP growth in the current fiscal year. All business houses are hurting in particular in the manufacturing, hospitality, airline, and financial sectors, the MSME sector has been driven to the ground, millions of daily wage workers have been reduced to penury, and unemployment is at historic highs. It can be argued that such a massive economic hit could have been avoided had the county wide lockdown not been prolonged beyond the initial three weeks or been limited only to areas directly affected by Covid-19. The mishandling of the migrant workers issue has also caused labour shortages which will slow down the effort at resuming economic activity.

In determining India's strategy to address Covid-19 and an economy in the ICU the following realities need to be kept in mind:

  1. Covid-19 is here to stay at least through 2020 and perhaps into the first half of 2021 by when hopefully either a preventive vaccine or a specific cure for it would have been developed. Accordingly, till then social distancing will need to be observed with its attendant negative consequences for the economy.
  2. Since this pandemic is likely to be long lasting we will need to focus both on saving lives and livelihoods. Since one can only ignore the economy at our peril, its revival will have to be high on the agenda. In so doing one would of course have to tread gingerly observing social distancing norms and being prepared for a reintroduction of further lockdowns from time to time if warranted.
  3. Though India has a heavy case load of Covid-19 its spread has mercifully been patchy. It is concentrated mainly in the metropolitan centres and half the country remains unaffected as does much of rural India.
  4. The disease has relatively mild symptoms for most and not more than 15-20% of those affected need hospitalisation. Out of those hospitalised only a fraction require admission to ICUs.
  5. Sino-US distrust has been heightened by the pandemic as has the move from globalisation to localisation. Trust levels in China already hit by its hegemonic policies and the alarming dependencies created by it the world over have shrunk to an all time low due to its role in the spread of Covid-19 and its export of shoddy medical supplies. These developments are opportunities to build brand India and to provide a home to businesses from countries like the USA and Japan seeking to relocate from China. However, we would do well to note that China is likely to be more assertive vis a vis the rest of the world in the coming weeks, since the former, with the first phase of the pandemic having run its course there, has been able to restart its economy, while much of the latter have not been able to do so as the pandemic, having come later to them, continues to ravage them and compel them to keep their economies in lock down.
  6. The fragility of the international order which had long been on display in the UN, in WTO, in the UNCHR etc, has been further underlined by the less than professional performance of the WHO which has acted more as a Chinese puppet than as an independent entity geared to safeguarding the health of the international community.
  7. India's economic situation is grim which, as a result of the lockdowns, is projected by some to register zero economic growth during this fiscal. Nearly all sectors of the economy are hurting. With other countries similarly hit international trade too has been severely mauled and is unlikely to recover any time soon. The universal economic slowdown has led to a collapse in oil prices. At one level this is a boon for India, given its massive oil imports, but at another level it is highly detrimental as the very substantial foreign exchange remittances being sent by our expatriates in the Gulf will dry up as these individuals stand to lose their jobs. Additionally, they will be forced to return to India in large numbers increasing the pressure on an already hard pressed employment situation.
  8. All is, however, not bleak. India can derive satisfaction from the fact that it not only sits on huge food grain and foreign exchange reserves, but has also had an excellent rabi harvest ensuring its food security in the months ahead notwithstanding its large free food distribution programmes. Moreover, nearly half the country including most of rural India has not been unaffected by the virus. It can also derive satisfaction from the fact that its pharmaceutical sector as well as its scientific and medical community, including also paramedics, nurses and support staff have performed flawlessly through the pandemic. Accordingly, there are unlikely to be any shortfalls in Covid-19 related medical supplies, equipment and facilities. Additionally, the railways, the airlines, and the postal services which have often been taken for granted have rendered yeoman services through this crisis as of course as always the Armed Forces.
  9. Finally, the pandemic and the resulting lockdowns have not been an entirely unmixed tragedy. They have led to a dramatic fall in pollution levels resulting in our once again savouring the benefits and pleasures of fresh air, clean rivers and blue skies. Furthermore, it has reminded us of the importance of the traditional Indian values of making do with necessities rather than engaging in mindless and conspicuous consumption.

The aforesaid realities demand that India while dealing with the Covid-19 pandemic must equally be focussed on the urgent revival of its economy. Dealing with one without addressing the other will be suicidal. This is all the more so as the mortality rate of this pandemic is not too high as was the case of the 1918 pandemic and the vast majority of cases are self limiting.

Since around 300 districts and most of rural India are free from the grips of the pandemic full economic activity should be restored in these areas at the earliest. In so doing it would, of course, be prudent to continue to maintain social distancing along with ensuring that proper hygiene including regular hand washing is observed at all times. Additionally, ingress into these areas from those affected by the pandemic should be restricted with a view to ensuring that they continue to remain Covid-19 free.

In the rest of the country where Covid-19 is still prevalent there should be a graded lifting of restrictions on the recommencement of economic activity with social distancing along with other necessary precautions. In this context, multiple and complex zonal classifications detailing what can done in each zone are best avoided as these lead to unnecessary confusion. There should only be red and green zones. For the latter a small negative list of activities is all that is necessary and correspondingly for the former a small positive list of activities should suffice. Clarity and simplicity of rules must be the name of the game.

As we move towards building a new India we need to be guided with the vision of both Swachh Bharat and Swachh Bharatiya. This should not only include an environment friendly and pollution free India, so that fresh air and clean rivers are always with us and not just during lockdowns, but also a nationalistic people who pay meticulous attention to personal cleanliness and hygiene, eschew repugnant practises like spitting or urinating in the open, and are fervently dedicated to India's advancement. Achieving this will require carefully crafted policies, concerted publicity campaigns, well devised educational curricula, and imposition of heavy fines on defaulters.

A Swachh Bharat will remain an illusion if our cities remain dotted with jhuggi jhompris and slums where people are packed like sardines in the most unhygienic conditions. Social distancing in such clusters is an impossibility and it is no surprise, therefore, that they are breeding grounds for a myriad of diseases. The State must, therefore, undertake appropriate housing projects with a view to eliminating such settlements. This can, perhaps, be done in partnership with the private sector including also the employers of those who live in these areas.

Keeping in mind the trend towards localisation we need to consider the creation of self sufficient district communities which would be an up scaled version of Gandhiji's concept of self sufficient village communities. With India's strong agricultural base coupled with its internationally acclaimed artisanal skills and traditions this is eminently doable. It can easily be accomplished by consciously establishing a series of small and medium enterprises catering to the specific requirements of each district and also including a wide range of food processing and agro related industries.

These agro based communities must be equipped with cold storages which would help in both the preservation and marketing of local produce. Such communities should be geared to promoting a sustainable environment friendly model of development which would inter alia foster organic agriculture, minimal use of pesticides, fertiliser, water etc and an end to stubble burning.

Additional vibrancy could be imparted to these communities by co locating therein quality educational, scientific, and medical facilities. Such district communities would enhance food security, improve the lot of farmers by providing value addition to agricultural produce, give a boost to handicrafts, improve the quality of rural life, promote self sufficiency and prevent unnecessary migration to urban centres.

We need to consciously work towards achieving the goal of self sufficiency in as many areas as possible. This is important in order to conserve foreign exchange, to generate employment, and to minimise dependency on foreign players. Over time it will also open up export possibilities. In accordance with such an approach we should shun imports of non essentials and make do with Indian substitutes. As regards essentials, including in the defence sector, we should only import what is absolutely unavoidable and prefer to make do with Indian substitutes even if they are inferior while trying of course to work towards indigenous upgrades.

The quest for self sufficiency should not be mistaken to imply that we should eschew linkages with global value chains. The two are not necessarily contradictory. Foreign companies looking to relocate from China should be incentivised to invest and set up production facilities in India. This could be done by creation of special economic zones for such companies with ready availability of land, power and water, accord of speedy licensing clearances, and labour reform allowing companies the freedom to hire and fire workers. Additionally, we need to create world class infrastructure not just to encourage foreign companies to relocate to India but also for our own industries. Indeed, the mantra from now on must be build, build, and build. This will at one stroke place our economy on a high growth path, generate employment and incentivise investment in India.

We must at all times be nimble and not miss out on any opportunity that can be used to India's advantage. Both the sharp fall in oil prices and the huge requirement of medical supplies are just such opportunities. The oil price fall should be used by India to build at least a 45 day strategic oil reserve over and above its rather small 5 million ton reserve. While our existing oil storages are reportedly full and our refiners also do not have any additional storage capacity it should be possible to use our depleted oil fields and structures for this purpose through creative use of technology. Similarly, with the world facing a shortage of medical supplies ranging for masks to personal protection gear and from medicines to ventilators we have a wonderful opportunity to gear up our production capabilities to meet some of these requirements. Above all, the crying requirement today the world over is for a vaccine to prevent Covid-19. Funding is a major requirement. The government could give a fillip to the exploratory efforts in this direction by fully financing the required research and testing. The expenditure incurred in this regard would be more than recovered by amounts that would be realised by the vaccine developed.

At a time when countries find themselves bereft of any leadership at the global level because of the fragility of the international order, distrust of China, and the lone ranger approach of the US, Prime Minister Modi has perhaps been the most proactive leader in providing direction to the fight against Covid-19 both in words and deeds. While repeatedly underlining at a variety of fora including NAM and the G20 that there must be a common front and a cooperative approach to address this pandemic he ensured that India, though itself hard pressed for Covid-19 related medical supplies, readily shared the same with scores of countries. Indeed, India has not disappointed any country which sought assistance for addressing the pandemic to the extent of its capabilities.

Prime Minister Modi also convened a SAARC video conference devoted to addressing Covid-19 urging a cooperative approach to dealing with it and provided assistance to countries in need apart from setting up a special fund for this purpose for which India made an initial contribution of $10 million. Similarly, India recently sent the naval vessel Kesari to the Maldives, Mauritius, Madagascar, Seychelles and the Comoros with Covid- 19 related essential medical and food supplies. The vessel also had two medical teams for deployment in Mauritius and the Comoros to deal with the Covid-19 crisis there. Such an empathetic approach is in the best traditions of Indian diplomacy and will stand the nation in good stead. It is bound to be noted and appreciated the world over. It must be persisted with as it is in the nature of a vaccine which will help to insulate us to an extent from the machinations of an over active China in our neighbourhood.

In keeping with India's proactive foreign policy on Covid-19 it would be desirable if we join hands with countries like the USA and Canada in support of the move to ensure that Taiwan is allowed to attend the upcoming World Health Assembly meeting scheduled to be held in Geneva on 18 May 2020. Taiwan has been debarred from attending WHO meetings for the last few years due to China's pressure. This is unfortunate because Taiwan's warnings of the impending Covid-19 pandemic were ignored by the WHO. Taiwan's participation at the World Health Assembly meeting would, above all, be invaluable in fighting Covid-19 as it has been, perhaps, the most successful country in fighting this pandemic and we could all learn from it. Our support to Taiwan's participation would of course annoy China but in so doing we would not only be doing what is right and in the greater international interest but would also be sending out a signal that China's bullying can and must be resisted.

Finally, the Government has announced a liberal relief and stimulus package ( Rupees 20 lakh crores) for all sectors of the economy. However, the details of the package are to be given out by the Finance Minister in coming days in a phased manner. The package could have three main elements notably a wage component, a loan component and a tax forgiveness component. The wage component should entail an underwriting by the Government of the 90 day wage bill of all enterprises. The loan component should contain a facility enabling enterprises to obtain loans on easy terms to meet their fixed term costs barring the wage bill for upto 90 days. A carefully crafted package of tax reliefs and other concessions should be developed tailored to businesses in each sector of the economy depending on the extent of hit it has taken. Clearly the cash trapped Government will have to meet much of the enormous out goes in this regard through deficit financing and the Fiscal Responsibility Budget Management (FRBM) norms will have to be disregarded.

(The paper is the author’s individual scholastic articulation. The author certifies that the article/paper is original in content, unpublished and it has not been submitted for publication/web upload elsewhere, and that the facts and figures quoted are duly referenced, as needed, and are believed to be correct). (The paper does not necessarily represent the organisational stance... More >>

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