Lockdown will have far reaching impact, recovery will be tough

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When Prime Minister Narendra Modi announced a total lockdown of the entire country on a four-hour notice in a Tuesday address to the nation there was a mere 519 coronavirus cases and nine deaths. He went on to say that to save India, to save each of its citizen, every street, every neighbourhood was being put under lockdown. But he definitely did not envisage the ramifications of his announcement. Things have just gone from bad to worse from thereon. At the time of writing this article India had more than 3.3 million reported cases with more than 60,000 deaths.

The size of India’s population makes the scale of its lockdown unprecedented. Even in China, only the city of Wuhan and its surrounding area, the epicenter of the outbreak, were put under complete lockdown.

The nationwide lockdown was imposed on India following novel coronavirus pandemic. In this article, we will elaborate on socio-economic, health and the national healthcare challenges following lockdown, with focus on population belonging to low socio-economic stratum.

While the nationwide lockdown has resulted in financial losses and has affected all segments of society, the domino effect on health, healthcare and nutrition could possibly pose major setbacks to previously gained successes of National health programs.

Real Gross Domestic Product (GDP) growth had been estimated by the Reserve Bank of India (RBI) at 6.2 per cent in 2019-20. The International Monetary Fund however, lowered India’s growth forecast by 1.3 per cent points to 4.8 per cent for 2019-20 and stated that India’s growth had slowed sharply. It is self-evident, therefore, that an economy already affected by slow growth in the previous fiscal year would be severely affected by the lockdown as a result of the pandemic.

The Small and Medium Enterprises market ratings project that the nationwide lockdown is expected to incur losses of over $4.5 billion (₹ 35,000 crores) every day during the lockdown. The healthcare sector, the fourth-largest employer in the country, and specifically the private sector which provides nearly 80 per cent of out-patient care and about 60 per cent of in-patient care is currently facing 90 per cent losses due to decrease in out-patient attendance, elective surgeries and international patients.

During the current pandemic, the economic downturn has greatly affected people from the lower socio-economic stratum (SES). Remittance of money to the home country, which many migrant Indian workers popularly do, is another way of poverty reduction, economic development and increase in GDP. About $139 billion (₹ 1042500 crores) was remitted to low and middle income (LMICs) countries of South Asia from countries of work (e.g. Gulf countries) in the year 2019.

The disruption caused by COVID19 has had a significant impact on these remittance flows. Importantly, remittances are projected to fall by about 23 per cent in India in 2020, to $64 billion (₹4,80,000 crores) in striking contrast to a growth of 5.5 per cent and receipts of $83 billion (₹ 6,20,000 crores) seen in 2019. The World Economic Forum states that in the current pandemic situation, migrants stuck abroad trying to cope with the exigencies will compromise to the adverse circumstances, by taking up low wage jobs, live in poor working conditions, restrict spending and thus, risk exposure to infections like the coronavirus.

The scenario among the internal migrant workers (intra- and inter-state) in India is equally grim. These workers constituting the informal sector, total to a staggering 139 million and are about 93 per cent of the workforce. About 50 per cent of migrant workers stated that they had rations for less than a day when interviewed. Further, a study by Stranded Workers Action Network showed that 89 per cent of the stranded workers had not been paid wages by their employers during the first 21 days of lockdown and that 74 per cent had less than half their daily wages to live on.

The economic impact of this pandemic is likely to be more severe for India in the following manner; (a) increase in poverty i.e. pushing more people below poverty line, (b) worsening of socio-economic inequalities, thus affecting health and nutrition indices, and (c) compromise in health-related precautions (use of masks, social distancing, seeking medical advice in case of cough and fever, etc.). All these would have major long-term associations with health indicators.

The nation’s aviation industry, which has endured a grounding of all domestic flights, is bracing for a loss of between $3.3 billion and $3.6 billion from April to June, according to CAPA India, an aviation consulting firm, Fortune India reports. India’s major carriers, such as Air India and IndiGo, may weather the lockdown with deeper cash reserves and potential financial assistance from the government, but smaller airlines might not survive.

The coronavirus pandemic may prove a major setback to India’s hopes of becoming a global aviation powerhouse. India’s domestic airline industry represented the fastest-growing market in the world for four straight years until 2019, according to the International Air Transport Association.

India’s measures also pose a threat to the nation’s information technology sector, whose systems are vital to global commerce. India controls more than half of the world’s IT outsourcing market; its share of the industry serves over three-quarters of Fortune 500 companies and contributes roughly $58 billion a year to U.S. GDP.

With its work product based online, the IT industry is theoretically well-suited to shift to working from home, yet the lockdown has sent industry leaders in India scrambling. Some told Reuters they were unprepared for the rapid shift from office to home, citing various challenges, from a lack of equipment to regulations and privacy.

Article by Arijit Nag
Arijit Nag is a freelance journalist who writes on various aspects of the economy and current affairs.
Read more article of Arijit Nag

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