Ramon Magsaysay Award winner and rural affairs expert P. Sainath made a telling comment during a discussion on NDTV the other day, when he summed up an impassioned argument for farmers to move from cash crops to food crops in the upcoming Kharif season, saying: “I do think it’s tough to digest cotton.” The point Sainath was making is crucial, when seen against the kind of scenes India has witnessed ever since the government announced a 21-day lockdown of the country from March 25 to tackle the spread of the Coronavirus (Covid-19) pandemic which has ravaged the world and brought the most developed economies down on their knees.
Heartbreaking scenes were witnessed across the major metros, with several thousand migrant workers deciding to walk back hundreds of kilometres to their villages, with the lockdown bringing all economic activity to a grinding halt. A large number of people are also outside the purview of the public distribution system (PDS) because their names don’t appear on a ration card. The choice before several thousands, therefore, would have been to remain in the states where they work and, perhaps, go hungry, or try and return to their homes in a bid to eke out some sort of livelihood and be with their families.
To be sure, the Narendra Modi government, now in its second term and on the verge of completing its first full year in office after being re-elected with a thumping majority in 2019, has been trying to address the problems of the poor and underprivileged as soon as the lockdown was announced, sensing that the virus could deal a crippling blow to those who are on the fringes. The Pradhan Mantri Garib Kalyan scheme, announced a day after the lockdown, did seek to provide support by way of a mix of direct cash transfer and food, but the ₹1.7 lakh crore package may not be enough given the magnitude of problems India’s poor face. For instance, the ₹500 per month provided for three months under the package to the 200 million women with Jan Dhan accounts will hardly suffice since many of them have several mouths to feed, and breadwinners who are out of work.
Equally severe is the problem faced by the millions of micro, small- and medium enterprises which employ crores of workers, and where machines across the country have come to a grinding halt. Though the lockdown is very gradually being eased from April 20 in some areas where the pandemic’s effect is low, it’s a razor’s edge situation which has no guarantees for the small scale sector and its workers.
This, clearly, is Narendra Modi’s biggest challenge as he and his government, together with the states, fight a pandemic which threatens to derail every conceivable notion of economic stability. Even as his government was grappling with a slowing economy, and a decline in consumption activity, the Covid-19 pandemic has brought with it a challenge which will test the government’s acumen to the hilt. Already, a second stimulus package is being talked about — many experts have said the ₹1.7 lakh crore package compares poorly with other countries that have spent far more on stimulus packages. The Reserve Bank of India (RBI), on its part, has come up with two big-bang sets of moves, including a deep cut in the benchmark interest rate, and several steps to infuse additional liquidity into the system. But nothing seems to be enough as of now. Does the government have enough ammunition to push through a bigger, more impactful stimulus package? Everyone agrees the fiscal deficit should be the least of its worries for now. The bigger aim must be to support the economy and prevent it from sinking into a negative rate of growth.
The International Monetary Fund (IMF) has already called the global economic crisis “The Great Lockdown” and the “worst economic crisis since the Great Depression”. Global growth is projected to end up at -3% for 2020, according to IMF. According to estimates by Gita Gopinath, IMF’s chief economist, put out on April 14, India’s estimated growth rate for 2020 at 1.9% still seems far better than the -6.1% seen for the advanced economies. But then, these are estimates of mid-April, and the virus can throw all calculations awry.
As the government gets into a huddle to come up with solutions, large parts of the country may still remain under lockdown, depending on how badly these regions are impacted by the virus. Airlines and railways will remain at a standstill even after May 3 until the government decides it is safe to allow them to gradually begin functioning. And even if they do, how they will cope with the post-Covid world is the subject of another discussion.
For now, the government will need to focus all its energies on allowing the economy to start functioning gradually and in phases, so that crores of Indians can begin earning a livelihood again. Equally, it will have to ensure the loss of lives owing to the pandemic is minimised. It’s a tightrope walk which 130 crore Indians will be watching with bated breath.