The Cost Of Lockdowns

In his address to the nation on April 20, Prime Minister Narendra Modi urged states to think of lockdowns as a means of last resort.

- Anilesh S. Mahajan

MUMBAI HALTS The road outside Chhatrapati Shivaji Maharaj Terminus during the ongoing lockdown

Within a week, though, faced with a runaway spiral in Covid cases, Maharashtra, Delhi, Gujarat, and Karnataka were forced to do just that, while Punjab, Chhattisgarh, Rajasthan, and Haryana had to impose night and weekend curfews.

Already reeling from the aftereffects of the nationwide lockdown last year, Maharashtra was forced to announce an extension of its calibrated lockdown till May 15. It’s the largest state in terms of GSDP (gross state domestic product) and contributes 14.2 per cent of the national GVA (gross value added). In FY21, the state’s economy contracted 8 per cent in real terms and 5.6 per cent in nominal terms. Soumya Kanti Ghosh, the chief economic advisor at State Bank of India (SBI), estimates in a report that the ongoing lockdown will wipe out over Rs 80,000 crore, or 2.7 per cent of the state’s GSDP. Maharashtra’s fiscal deficit was 3.3 per cent of GSDP in FY21—a 15-year high—and the current lockdown is grim news for its industry and services sectors, both of which witnessed a contraction of over 11 per cent last year.