The Lockdown Blues
India Today|May 24, 2021
Calibrated lockdowns, determined by the states, may have restricted the economic damage in this second wave, but consumer demand for all but essentials is likely to take a hard hit
M.G. Arun And Shwweta Punj

With about 366,000 new cases and 3,745 deaths in the previous 24 hours on May 10, the second wave of the Covid-19 pandemic has taken a vicious toll on India’s health. Predictably, the economic toll has also been heavy, though nothing like the carnage seen in the first quarter of the last fiscal year, when GDP growth crashed -23.9 per cent in response to the Centre’s no-notice lockdown.

A major concern of the second wave is that the virus has spread into India’s hinterland and could wreak havoc in villages, towns and small cities. Lockdowns might help break the chain of transmission, but they will only postpone another surge unless the period is used to urgently vaccinate the population. The economic cost will depend on how quickly this happens—and the news on that front is not too promising (see Shots in the Dark, page 32)—and how quickly economic activity can return to an uninhibited normal.

It has been clear for some time now—at least since Prime Minister Narendra Modi announced on April 20 that national lockdowns should be a “last resort”—that it was being left to state governments to manage their own Covid-containment strategies. In April, Finance Minister Nirmala Sitharaman also reached out to business leaders to assure them that there would be no repeat of 2020’s national shutdown, but that’s what it is willy-nilly, with most states forced to impose restrictions on movement and non-essential economic activity. What distinguishes this year from the last is that key businesses are being permitted to operate in several states, with state and national highways open for the uninterrupted transport of essential goods. Industry leaders also seem in favour of the current system, arguing for strict restrictions on the movement of people to contain the virus, but not a lockdown directed by the Centre. “State-level decisions are better than a one-size-fits-all approach,” argues an industrialist.

KEY INDUSTRIALISED STATES have implemented severe restrictions. These include Maharashtra, which accounts for over 14 per cent of India’s GDP. With the highest number of cases in both the first and second waves of the pandemic, the state currently has lockdown-like conditions on weekdays and a complete shutdown on weekends. These are currently in force till May 31. They are both supported by business leaders and seem to be working—new cases were down to 37,236 on May 11 from 67,468 cases on April 22. “The restrictions in Mahatrashtra have been appropriate for the conditions we have had,” Naushad Forbes, chairman of Forbes Marshall, tells India today. “They were practical and correctly targeted.”

$38.4 BILLON or Rs 2.8 lakh crore, Barclays’ estimate of India’s losses if lockdown continue till end-June

In Maharashtra, most industries remain operational, adhering to strict Covid protocols and with lower employee headcounts. The problem is the fall in demand—one of the reasons for smaller workforces—as a result of markets, malls, cinemas and theatres and shops selling non-essential goods being closed. Even those selling essential goods face restrictions, permitted to operate only between 7 am and 11 am on weekdays. Kumar Rajagopalan, CEO of the Retailers Association of India, says large retailers have adapted, investing in digital infrastructure to facilitate online ordering and delivery. However, given that e-commerce is only permitted for essential goods and that hundreds of thousands of small entrepreneurs do not have online delivery models, the restrictions have had a lethal impact on business.

Further south, in Karnataka, Tamil Nadu and Kerala (the last two of which recently concluded assembly elections with no Covid protocols in sight), complete lockdowns are currently in force—in Kerala till May 16 and in Karnataka and Tamil Nadu till May 24. In the north, Delhi has extended its lockdown till May 17, while Rajasthan is closed till May 25. While cases surge, state governments have no choice but to maintain these restrictions—lifting them would cause much worse damage. “Health outcomes will determine India’s economic outcomes,” says Forbes, highlighting that quickly vaccinating the public is essential to even protect the economy from the pandemic.

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