View: Covid-19-free clusters within districts should be unshackled from the economic costs of lockdown

Economy


By Bibek Debroy

The April 15 home ministry order, applicable from April 20, needs to be read together with what the health ministry has told us. To state the (often unappreciated) obvious, Covid-19 infections aren’t uniformly distributed throughout the country. Spatial distribution varies across states and, more importantly, across districts. Governance, even if Covid-19 hadn’t occurred, needed decentralisation to districts and, further down, to local bodies.

Based on objective and dynamic criteria, the health ministry has classified districts into three zones: red (170 districts, where the entire district is a hotspot, or a cluster within the district is a hotspot), orange (207 districts, where there may still be a cluster), and green (completely non-infected districts). Since the criteria are dynamic, a district will hopefully graduate from red to orange, or from orange to green.

Loading...

Cause and Effect

To cite a state-level example, Sikkim has not had a single Covid-19 case. One can debate the efficacy of lockdown. For instance, Sweden performs rather well on Covid-19-related indicators, despite no lockdown. A lockdown has economic costs. As a counterfactual, suppose India had clamped down on all migration from the rest of the world in December 2019. Would one have recommended lockdown for India? Obviously not.

back-to-biz-logo

The virus was imported from the ‘rest of the world’. Within the country, transmission has originated in cities. If Sikkim can contain imports of the virus from the rest of India, why subject it to economic costs of lockdown? States aren’t the right unit. Neither are districts. The right unit of identification is clusters within districts. For instance, Delhi has had a large number of infections. But northwest and northeast Delhi have clearly fared better than other districts.

At one end of the spectrum, we needn’t have had a lockdown at all. With the trait of violating government-set norms and not exercising self-discipline, there would have been a large number of infections, although many of these (perhaps, around two-thirds) would have been asymptomatic. A lower number would have required hospitalisation (not more than one-third), and fatalities would certainly not have been as high as some alarmist numbers suggest. In a recent ranking conducted by some researchers, compared to several countries, India scores high on a stringency index, designed to gauge government response to the epidemic.

At the other end of the spectrum, we could have contained with a prolonged lockdown, till whenever the long tail of the distribution disappears, beyond September 2020. Neither end of the spectrum is desirable. That’s what is sought to be done after April 20.

The onus is on states and local governments, as it should be. Yes, states and local governments vary in capacity, and will vary in how efficiently they handle Covid-19. Ideally, one wishes for a red to orange, and orange to green shift. However, in a perverse and dynamic world, in a few instances, a reverse spectrum shift is also possible. But there are some states and district administrations that have reacted quite efficiently.

To contain transmission, there have to be restrictions on rail and air travel, inter-district and inter-state labour movements, and public gatherings. The home ministry has announced a template of permitted activities – agricultural and allied work, financial sector activity, Mahatma Gandhi National Rural Employment Guarantee Act scheme work, activity involving public utilities, essential goods, commercial and private establishments, industries and industrial establishments and construction.

Benefit of Disassociation

This is a minimum template, and states are free to introduce more stringent restrictions, as long as the minimum is adhered to. The media have highlighted the government guidelines’ focus on the rural sector. This isn’t merely because of rabi harvesting or the plight of returning migrant workers. Any objective identification of hotspot districts and clusters will show infections are largely an urban phenomenon. It was urban India that imported the virus and transmitted it.

To the extent rural India is free of, and isolated from, Covid-19 contagion, it can be opened up. Obviously, integration (not just global) has positive externalities. But it also exposes us to risks. All historically documented epidemics have been imported. Large parts of rural India have escaped unscathed because they haven’t been completely integrated, especially in labour market terms.

Since liberalisation in 1991, rural India hasn’t benefited commensurately. Nor has it suffered to the same extent from Covid-19. Beyond April 20, we have a graded exit from the lockdown because livelihoods, and not just lives, are at stake. Naturally, growth (GDP, as well as employment) revival requires efficient labour markets and migration.

Ever since all of humanity moved out of Africa, migration has been linked to productivity increases and prosperity. The word ‘manufacturing’ has the same etymology as ‘manual’, implying ‘made by hand’. Despite capital and technology, we still need labour. The present graded exit is inevitably constrained because of restrictions on labour movements.

In different degrees, all the activities mentioned require labour. That use of labour will be restricted to whatever is available locally, and within the district. To that extent, gains are limited. But it is a dynamic process. Unfortunately, Covid-19 spread because of human-to human transmission. Ergo, human-to human interactions must be restricted. To do otherwise, to use the word colloquially, would be bats.

The writer is chairman, Economic Advisory Council to the Prime Minister



Source link

Articles You May Like

How SpaceX, Virgin Galactic, Blue Origin, Axiom compete
How to plan for retirement when you are in your 50s
With remote work options, people opt to relocate before retirement
Lok Sabha passes Bilateral Netting of Qualified Financial Contracts Bill, 2020
Will Smith, Kevin Hart fund pandemic-proof virtual events start-up Run The World

Leave a Reply

Your email address will not be published. Required fields are marked *

Loading...