The Corona Conundrum in India: The catastrophe that could be an economic opportunity
Modeling a scenario including social distancing of the whole population, home isolation of cases and household quarantine of families might bring total deaths down but without a concomitant economic package there is a looming disaster of deprivation, hunger, destitution and death that may well turn out to be even worse for country such as ours.
Indeed, many governments have now discarded the idea of “herd immunity”, implying managing the infection rate so that enough people become immune to prevent the virus from transmitting. The spread of the virus worldwide has broadened, and is expected to be more prolonged. Governments, both international and domestic, have announced stricter mitigation measures to slow the spread of the virus, which are having significant economic impacts, thus driving home the point that any mitigation measures in national strategic policy endeavors devoid of economic considerations would be disastrous.
In this context what Rishi Sunak said for UK, may well apply to India and every country battling now with the Corona epidemic, that this is not a time for ideology and orthodoxy, this is a time to be bold, a time for courage. Yes he reassured every British citizen that this government will give you all the tools you need to get through this and it means any business or individuals who needs access to cash to pay their rent, their salaries, suppliers or purchase stock will be able to access a government-backed loan or credit on attractive terms. The initial £330bn for loans by the British will go further and provide as much capacity as required. The Prime Minister Boris Johnson said during the same media briefing that “we must do whatever it takes to support the economy”. He added: “This a time to be bold, to have courage. We will support jobs, we will support incomes, we will support businesses… We will do whatever it takes.”
Across the Atlantic Trump administration also broadened the government’s response to the corona virus pandemic and spelled out the $2 trillion stimulus plan and economic package, asking Congress for an infusion of $500 billion for direct payments to taxpayers and $500 billion in loans for businesses.Trump administration is proposing two waves of checks to individuals and another $500 billion for small and large businesses as part of its economic response to the coronavirus pandemic. The US government has announced a second major economic rescue package in emergency banking measures to prevent against a credit freeze.
Likewise, the Australian government announced a second set of economic responses which, combined with previous actions, total $189 billion across the forward estimates, representing 9.7 per cent of its annual GDP. These actions do provide timely support to affected workers, businesses and the broader community. Framed as a “safety” package, the second wave of stimulus ramps up support for small business and also includes a major boost to welfare recipients and for people who lose work as a result of the Covid-19 pandemic. The new suite of measures was described by prime minister Scott Morrison on Sunday as “unprecedented” and targeted at those on the front line who will be first to feel the hit of the downturn.
In India, the aim is suppression so that only a small fraction of the population is infected. Yet social distancing, population lock downs and self isolation may only work partially, more so in a developing country like India that is predominantly a gregarious society where unorganized and daily wage sector survives almost on a daily basis through its dependence on daily employment and wages.
As never before, it is time for Prime Minister Modi, to be revolutionary in his approach and show great innovation by unveiling an economic stimulus like other nations. Perhaps India may soon unveil an economic stimulus package of Rs 2.3 lakh crores, and also put money directly into the accounts of more than 100 to 200 million, apart from a slew of other measures. This may well be an opportunity to unleash a direct cash transfer scheme as proposed a couple of years earlier by the then Chief Economic Advisor, Arvind Subramanian who argued for Universal Basic Income (UBI) for every citizen.
Considering that India faces a loss of 3.5% of our GDP during the Corona epidemic, a very courageous and creative approach is the need of the hour. A farsighted and visionary move to scrap all existing unwarranted and inefficient plan and non plan schemes and subsidies to raise a economic stimulus of 5 lakh crores for the country and a monthly UBI of Rs 10000 for below poverty line individuals is the perfect and emerging opportunity. This will not only be a bold step but also timely aimed not only to giving money in people’s hand to sustain their livelihood in the looming Corona Conundrum but also will kick start consumption and stimulate national economic growth.
The author, Dr. Anoop Swarup, is Roving Editor Newsroom24x7. He is also Vice Chancellor Jagran Lakecity University in Bhopal and has joined the Advisory Council for International Cities of Peace.
Swarup recently became Chair of the Center for Global Nonkilling when its founder Glen D. Paige passed away earlier this year.
In 2007, Swarup was appointed by the UN Secretary General Ban Ki Moon as UN Finance Expert for implementation of UN Security Council Resolution to stop the genocide in Darfur.
Swarup is founder and trustee of the Indian Council of Gandhian Studies. He has also been honored with the Soka Gakkai Hiroshima Peace Award at the Hiroshima Ikeda Peace Memorial Hall.