To ensure that the medical crisis due to the Covid-19 pandemic does not snowball into a devastating economic crisis, GoI will have to restart the economy after May 3 with adequate safeguards and surveillance. If we are unable to bring the economy back on track, India could lose 30-40 million jobs by end-2020.
So far, India has done a phenomenal job of ‘flattening the curve’, and current data indicate that the country is entering into a safe zone. As of April 24, the Indian Council of Medical Research (ICMR) reported a test positivity rate (TPR) of 4.4% (i.e., 1in 23 people tested were positive).
Compared to India, the US had a TPR of 19.3%, Spain 18.2%, Italy 13.2% and Japan 8.8%. However, there is a caveat: TPRs are not accurate projections of infection rates as it all depends on testing rates. Perhaps India’s TPR could be even lower.
Also, while total confirmed cases continue to grow in India, 29,451on April 27, the growth rate of active cases was at about 6%. This means, the number of active cases are doubling every 10 days, instead of every three days before the lockdown.
If we look at the mortality rate, India is much better than the western world due to the latter’s ageing population. The world over, about 80% deaths have been reported among people 60 and above. India has a demographic advantage with 90% of its population being under-60.
Therefore, after the lockdown is eased, our focus should be on protecting the vulnerable sections, especially those over-60. Those under-50 should be allowed to go back to work to sustain the economy. Opening up the lockdown needs some lifestyle changes.
The government( s) should continue to enforce social distancing measures and prohibit large public gatherings. Malls, cinemas and restaurants should remain closed, and big sporting events not permitted.
Wearing of masks, regular sanitisation of public places, disinfection of common surfaces and temperature-screening in public places should be mandatory. Testing should also be scaled up to include general public, especially asymptomatic cases.
Widespread antibody testing is a critical step towards determining onset of herd immunity. On the economic front, India needs coordinated fiscal and monetary policymaking to tide over the crisis and lay the foundation for a growth revival.
Some amount of ‘quantitative easing’ to enhance liquidity in the economy is needed. GoI will also have to provide a huge financial stimulus to boost industrial production, across small, medium and large enterprises. India’s oil import bill could halve from $105 billion estimated for FY2020 on account of the collapse in global crude oil prices.
This will give GoI the firepower for announcing a big bang stimulus package to prop up the economy. Allocating $20 billion (0.3% of GDP) of the oil savings to provide a stimulus package for SMEs is imperative. GoI should also look at introducing investment-linked and job-linked incentives tailored to the needs of a specific sector.
For example, the real estate sector, one of the worst affected, should get the flexibility to repurpose their residential projects into commercial ones, especially given the success of remote working. SMEs and startups must receive funding for manufacturing, services and innovation.
GoI may provide such stimulus through advance purchase contracts for Covid-19-specific needs like tests, biomedical supplies, hospitalisation and immunisation.
Funds should be earmarked for a big infrastructure push, both in terms of physical and cyber connectivity. A significant part of healthcare investment ought to be directed towards providing universal healthcare and upgrading primary health centres (PHCs).
Also, debt-equity ratio norms need to be eased to provide more liquidity to the industry. This crisis has given India an opportunity to position itself as a strategic partner of importance. As the world looks to de-risk supply chains originating from China, India can state its competencies and advantages much more emphatically.
Today, India is in a position to negotiate as equal partners with the US, EU or Japan. We must rise to the occasion, lift the lockdown to revive the economy in a calibrated manner.
We have done a great job in saving lives, now we must work towards saving jobs and livelihood. The International Monetary Fund (IMF) expects India’s FY2021GDP to grow 1.9%, making it the fastest-growing major economy in a recessionhit world.
It forecasts a 7.4% growth for India in FY2022, assuming the pandemic is brought under control, significant monetary and fiscal stimuli are announced, and a tailwind gained from lower oil prices.
We now need a mid- to long-term strategy that balances the economic, social and public health benefits and costs, while allowing for a gradual easing of restrictions.
The writer is executive chairperson, Biocon