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