COVID Lockdown; India’s Biggest Economic Blunder

On 22nd March, our prime minister Shri Narendra Modi announced the first lockdown of 21 days. The announcement came at the end of a symbolic day curfew, craftily branded as Janata Curfew and brilliantly wrapped with much clapping and clanging of metal to make it an inclusive and participative event. With the PMs popularity on a high, the clapping naturally morphed into an impromptu street party complete with dancing, dholaks, et al.

The world sees India as a spiritual country and so it came as no surprise when the second lockdown was welcomed with diyas and mashals. Hold on for a moment will you, India is also seen as the IT power house so mobile phone flash lights were permitted too. Millions shut off their electricity powered lights and lit traditional lamps and flashed mobile flashlights at 9 pm for 9 minutes. Lockdown 2.0, that is what the press called it, officially started on 15th April.

The third and fourth lockdowns, routinely named lockdown 3.0 and 4.0, were banal press releases lacking the spirit, hope and jubilation of the first two. It is not entirely clear why the PM did not personally make these announcements but, speculation is rife that he was socially distancing himself from his people.

By the end of Lockdown 4.0 the tally of positive cases stood at 190,000 and growing. New cases were growing by 5% every day and the nation was convinced that lockdown 5.0 was merely a formality waiting to be announced. The cricket crazy nation took a fresh guard and prepared for a long innings behind the line. That is when, a Chinaman that stumped everyone, Unlock 1.0, came floating across the pitch. The spin and turn on that one caught everyone by surprise.

A subliminal message of the highest standard, Unlock 1.0 conveys the following; Lockdowns are done with, the battle against COVID is done with, goal post has changed from victory over COVID to learn to coexist with COVID and normalcy is coming but in phases. The PM did not utter any of these, his legion of followers did.

As we start the long limp back to normalcy, it is time to look back and evaluate the gains and losses of the past 9 weeks.

Hospitals and doctors are better equipped and prepared to face the deluge of COVID patients. The lockdown succeeded increased the case doubling time from 7 days to 13 days. This ensured that fewer cases were admitted and treated by the doctors. Availability of quarantine beds, test kits and PPEs has increased manifold. Supply of ICU beds and ventilators needed to treat the more sensitive and immunity impaired patients has sadly remained unchanged.

Economy in 2019-20 was already in severe slowdown as the first quarter GP figures, with only six lockdown days show. The GDP for the last quarter of FY 2020, at 3.1%, was well below the finance minister’s assertions in parliament in the first week of February. The annual GDP for the year is also at a 11 year low of 4.2%. The government insists the lockdown impacted the collection of data, not the economy, and the figures would certainly be revised upwards shortly.

India’s economy is in a severe “lockdown” and we are not sure how far deep the bottom is. About 55% of the GDP is contributed by discretionary spending by the people. Consumption in the first two months of the current fiscal is down. Merchandise exports are reported to be down by as much as 60%. Despite RBI cutting repo and reverse repo rates and flooding the banks with liquidity, bank lending has fallen.

Unemployment is at an alarming level and rising. The nationwide shutting down of all commercial and manufacturing activity sent unemployment soaring at the cities. The exodus of jobless workers from urban India to their homes in rural UP, Bihar & Odisha has caused a spike in unemployment numbers in these states as well. With limited infrastructure, low tax revenues and no jobs back home these states are having to address a problem that they neither know how to nor have to resources to tackle.

The growth rate of COVID positive cases shows no sign of easing. Testing in the first 5 weeks was as low as 1,500 cases per day and gradually scaled up to about 100,000 cases per day. Even this number of 100,000 is too small given the 137 crores population of the country. Despite the low testing rates, the numbers continue to grow. Unlock 1.0 is likely to accelerate the growth.

“Very far away from the peak” said Indian Council of Medical Research (ICMR) scientist Dr Nivedita Gupta on 2nd June. We are at 2,00,000 plus cases and nowhere close to the peak. The jury is still out on whether there will be one peak or many peaks. Joint Secretary Health, Lav Agarwal, confirmed that states have been asked to requisition all possible facilities that can be turned into temporary quarantine facilities. Without having to read between the lines, it is clear that both ICMR and the government are on the same page; both recognise that we are nowhere close to the peak as yet.

Why has the lockdown been lifted when we are still far away from the peak?

Is Unlock 1.0 really a confession that our strategy to contain the virus from spreading has failed and now we have thrown up our hands?

Is Unlock 1.0 a signal that we have changed our strategy from containment to herd immunity?

Is the economic cost so severe that the nation cannot afford the luxury of a lockdown anymore? Was the economic cost not considered when lockdowns were enforced?

Is this just a temporary unlock to enable the ruling party do what it does best, topple opposition governments? Has the Covid Lockdown yielded to down Maharashtra government? If so, are we likely to see Lockdown 5.0 make a triumphant comeback once Thackeray is unseated? This then brings me to the most important question of all, Is the COVID lockdown independent India’s biggest economic blunder by far?