The word Lock­down was barely used just a few weeks ago. Now it is part of the gen­eral lex­i­con of news­pa­pers, tele­vi­sion shows and com­mon par­lance of the ed­u­cated and the less-ed­u­cated. Where are we on the thresh­old of Lock­down 3.0? Delhi Uni­ver­sity As­so­ci­ate Pro­fes­sor Ku­mar San­jay Singh pro­vides a peep into what is in store.

COVID-19 HAS BROUGHT THE IN­TER­NA­TIONAL AND na­tional econ­omy to grind­ing halt is a tru­ism. With a con­sen­sus emerg­ing amongst med­ical and eco­nomic pro­fes­sion­als, that there will be suc­ces­sive waves of the pan­demic till such time that a vac­cine is pro­duced, it will be wise to ac­cept and adapt to the terms be­ing dic­tated by the con­ta­gion.

Yet in or­der to sur­vive, we need not only med­ically re­quired pre­ven­tive mea­sures but also some de­gree of eco­nomic pro­duc­tion. Ar­ti­cles of sus­te­nance, which in­cludes med­ical sup­plies, de­pend upon it.

The phased re­lax­ation on eco­nomic ac­tiv­i­ties in lock­down 3.0 is Gov­ern­ment of In­di­a’s re­sponse to this eco­nomic im­per­a­tive. But do they mea­sure up to the chal­lenge?

There are cri­tiques of the ra­tio­nale be­hind de­ter­min­ing the colours of the zone; with Ben­gal gov­ern­ment ques­tion­ing its po­lit­i­cal mo­tive. There are oth­ers who ques­tion the per­mis­sion of non-es­sen­tial ac­tiv­i­ties in the red zone.

The cause of con­cern is that we are ap­proach­ing the mon­soon sea­son, which re­sults in floods in, among other states, Bom­bay and east­ern states. There are also epi­demics such as en­cephali­tis, haem­or­rhagic fevers, swine flu, etc., which could over­whelm In­di­a’s al­ready over­whelmed med­ical and eco­nomic in­sti­tu­tions.

Here I will ques­tion the ad­e­quacy of the pol­icy in ad­dress­ing the sup­ply and de­mand-side con­straints im­posed by a con­ta­gion-dri­ven re­ces­sion.

The sup­ply-side con­straints may con­tinue to im­pose a very rigid con­straint on eco­nomic re­vival. With most of the in­dus­trial and ur­ban cen­tres in the red zone, the re­stric­tions of lock­down will not only im­pose lim­its on op­er­at­ing at op­ti­mum ca­pac­ity but also in­crease the cost of pro­duc­tion. Fur­ther­more, even sec­tors where there’s a cas­cad­ing in­ter­na­tional and na­tional de­mand, such as phar­ma­ceu­ti­cal de­pen­dence on ac­tive phar­ma­ceu­ti­cal in­gre­di­ents etc. from China ex­pose it to in­ter­na­tional sup­ply and pric­ing con­straints.

I ques­tion the ad­e­quacy of the pol­icy in ad­dress­ing the sup­ply and de­mand-side con­straints im­posed by a con­ta­gion-dri­ven re­ces­sion.

Scarcity of labour may also pose a se­vere con­straint. With mi­grant labour re­turn­ing to their vil­lages, in­dus­tries, es­pe­cially the in­for­mal sec­tor and star­tups, will find op­er­at­ing pro­duc­tion lines to be an up­hill bat­tle. Re­gret­tably, the gov­ern­ment is yet to elab­o­rate the finer de­tails of its stim­u­lus pack­ages for in­dus­tries, es­pe­cially MSME and star­tups.

De­mand-side con­straints are also sig­nif­i­cant. With de­mand for nonessen­tials van­ish­ing, who will the in­dus­tries pro­duce for? The cash stim­u­lus for re­viv­ing de­mand is too in­ad­e­quate. More sig­nif­i­cantly in a con­ta­gion-dri­ven re­ces­sion, the gov­ern­ment, rather than in­di­vid­ual con­sumers, has to take the lead in gen­er­at­ing de­mand. Re­gret­tably, there is­n’t enough ev­i­dence of ei­ther a sub­stan­tial in­crease in gov­ern­ment spend­ing or state-gen­er­ated de­mand.

De­mand-side con­straints are also sig­nif­i­cant. With de­mand for nonessen­tials van­ish­ing, who will the in­dus­tries pro­duce for? The cash stim­u­lus for re­viv­ing de­mand is too in­ad­e­quate. 

The suc­cess of stim­u­lus pack­ages for con­ta­gion-dri­ven re­ces­sion de­pends on the rate of spread of the con­ta­gion. Much de­pends on whether we ar­rest the spread of the con­ta­gion. How­ever, in In­dia, the num­ber of pos­i­tive cases is still on the rise. As of now, over 80% of the cases are in the red zones. How­ever, we are al­ready get­ting re­ports of the dis­ease reach­ing rural ar­eas with mi­grant work­ers. The suc­cess of the pol­icy of eco­nomic re­vival de­pends on this.

The cause of con­cern is that we are ap­proach­ing the mon­soon sea­son, which re­sults in floods in, among other states, Bom­bay and east­ern states. There are also epi­demics such as en­cephali­tis, haem­or­rhagic fevers, swine flu, etc., which could over­whelm In­di­a’s al­ready over­whelmed med­ical and eco­nomic in­sti­tu­tions.

One only hopes that these chal­lenges have been taken note off by the pol­icy for­mu­la­tors.

Im­age cour­tesy: www.medicir­cle.in