‘India’s Response to Covid-19 has been Sadistic’

 Interview with Jayati Ghosh

[In a conversation with Number13, Prof. Ghosh talks about India’s response to the Covid-19 pandemic and its myriad impacts on society. Edited excerpts.]     

N13: How will Covid-19 impact the global economy?

JG: First of all, we don’t even know what post-Covid is, because at the moment, it’s all very unclear as to how long and how widespread this pandemic will be. What is very clear is that it is going to dramatically increase inequality because there is a very big difference in the macroeconomic policy responses in the developed countries and the developing countries. Countries like the US, the UK, many European countries, Japan, etc. have put in fairly large stimulus packages. They will, therefore, at least not face the very deep depression that is likely to happen in many other countries.

Developing countries have not done this. Very few developing countries have introduced large fiscal packages. And some like India have done almost nothing. As a result, we’re looking at a very deep recession and possibly a long depression. 

N13: What are your specific predictions on the economic impact of Covid-19 on India?

JG: I think in India, it’s not so much Covid-19, but the dominant policy response, which is responsible at the moment. They should stop blaming the virus. I would say that it is not Covid-19 itself, rather it is the way the government responded to it with a knee-jerk lockdown that destroyed the economy and destroyed employment and livelihoods. 

N13: Your comments on the stimulus measures announced by the government…

JG: I won’t even call them stimulus measures. They should have been designed to revive an economy that is in free-fall. But they have not done anything right. First of all, what we needed immediately was to put money in the hands of those who have lost their livelihoods and provide food to everyone. We could have done both very easily. We have huge amounts of surplus food, at least 50 million tonnes of surplus food grain, which could have been distributed immediately to 80% of the household, giving 10 kg per person for six months. We could have provided Rs.7,000 per household, again to 80% of households for three months. These people have lost their income because you did not allow them to work. So it is your responsibility to make up for that. But they have been provided absolutely no income relief.

N13: Is Covid-19 used or seen in India as a Social Darwinistic exercise to weed out the vulnerable and the poor? 

JG: It could well be. It’s otherwise hard to explain why the government is behaving in this way. The kind of cruelty, lack of compassion, I would say even the sadism of the responses! There is no other country in the world that gave the people five hours notice. We had 10 deaths and very few cases which were limited to certain cities and states. It was completely unnecessary to do such a complete lockdown without giving notice. You could have given a week’s notice to allow people to get their homes and to make preparations. Things would have been very very different, there would have been much less distress, much less economic catastrophe.

N13: What could have been done better about the way India handled the migrant crisis?

JG: We have examples in Kerala. In fact, Kerala had already put in place restrictions. In the early days, they were warning people, screening them and providing them some income. And when the Chief Minister of Kerala announced the Rs.20,000-crore package, these were the important elements of it. They have been providing the migrants there income and food for the period they will not have access to work. That is the basic minimum that we should have done. If the government knew they were not going to do this, it should at least have provided free transport back to their native. These are the things that have been done pretty much in many other countries. And it was done in one of our own states. So none of this is something that we cannot imagine.

N13: Talking about sadism in the government response, why is the government behaving this way? Doesn’t even votes bother it?

JG: Everything would have been different if there was an election six months from now, but they know they have four years. They are obviously cynical enough to think that it doesn’t matter, people will forget, particularly after the way they got away with demonetisation. They hoodwink people and they feel they can get away with it again. The unfortunate thing is that the reason why the economy and the disease are both going in such a terrible direction is because unlike people and the media, they cannot be manipulated or terrorised or hoodwinked. They can do it to people; they can bamboozle people, they can manipulate people, they can terrify them and lock them in jails. But they can’t do that to a disease, they cannot do that to the economy. They are completely incompetent in dealing with them. 

N13: Will the crisis lead to widening inequality?

JG: There will be a massive increase in inequality and it will actually reinforce and accentuate existing inequalities and the class divide we have already. Containment measures are so classist; they can only apply to the middle class and the upper class. People living in slums in urban areas or even in poor settlements in the rural areas can’t do all these social distancing. Second is the loss of jobs. Of course, it affects all the informal workers, but more it will predominantly affect women, SCs, STs and Muslims. In short, all the existing fault-lines have aggravated. 

N13: Do you think the government is going to continue its apathy towards these issues from the way you observe government policies? Are they likely to learn any lessons from this?

JG: I have given up trying to understand this government, the only way you can explain it is by believing that they’re just so deeply cynical and really don’t care about the people. I did not believe even when they first announced this doctrine, I knew it was going to mean terrible things for the economy. Even at that point, I didn’t expect they would be so callous. I thought they would do something. But they have done nothing about that. That requires a degree of complete callousness and also guts.

N13: All these grandstanding and talks about online education, can it really make a difference to the people at the bottom of the ladder?

JG: It cannot. I have been trying to do online classes for my students in JNU. I have 92 students, it’s a compulsory class. Not more than 35 to 40 are being able to connect to the lecture. They cannot connect and it’s too heavy for them to even download. About 25% of them do not have laptops. You can’t just watch a lecture on the phone, you cannot access the materials on your phone. And some of them have written and pointed this out. Somebody is in Sikkim, somebody is in Mizoram, somebody is in Kashmir. How can they have access? This is really deepening the divide.

N13: A lot of people, especially migrants, who have gone back to the villages are not coming back because they don’t get any benefits in the urban centres. Do you think this will completely wreck the rural economy?

JG: I think a lot depends on how the government responds. If the government actually, for example, dramatically increased the allocations and allowed MGNREGA (the rural job scheme) to meet the demand, if it actually enabled small, medium and micro enterprises and provided them a proper package for revival in the rural areas, then we could get a recovery in the rural economy. Migration is not a joyous thing. It’s not fun to be away from your family, your children, your parents and have them die in your absence, but people do it because they are desperate. But we have broken that basic social contract. As a migrant worker, overnight, you can lose your job and you have no idea when you will get your compensation, you will not get any protection and we will even prevent you from going back. With that kind of betrayal very few people will feel safe about going back to the urban areas to work. 

N13: Can you suggest a few measures that can be taken in the short term and in the long term?

JG: I think in the short term, we must, as I said, immediately revive demand in the economy, which means that we have to actually put money in the hands of the people who have been deprived of it. That refers to all the informal workers. They should be paid Rs.7,000 a month. We must immediately provide food to everybody, 10 kg per person for six months at least. We must dramatically increase the NREGA by allowing all adults to work and not put any limit in the number of days. It should not be ‘maximum hundred days per household’, it should be such that any adult can go and work without a limit on the number of days they can work. We must introduce an ‘Urban Employment Guarantee.’ These are the immediate measures. We have estimated that doing this immediately would cost about 5% of GDP. A fiscal increase of 5% can be paid immediately by borrowing from the central bank. Over time, you have to pay for it. Right now, you just have to borrow from RBI and do it. Over the next few years, you have to raise more money.

You also have to have a wealth tax. Just tax the top 1% of the population, not everybody. You tax 4% of their wealth, introduce inheritance tax and tax multinationals. At the moment MNCs are getting away without paying any taxes in India. Facebook, Google and Amazon and others barely pay any taxes because they shift all their profits outside India. 

This is just one pandemic. And we know we will have more and more natural disasters. So in the medium term, we have to have much more public spending on adaptation. And we need much more public investment in the care economy. We don’t have enough health workers and we don’t invest enough in healthcare. For all of that we have to put more effort into coordinating between the central and state governments. Sadly, unfortunately, among the many things that this government has undone is the idea of the country (India) and unfortunately, this country cannot revive until they bring it back in some form.

N13: What should the civil society do at this juncture?

JG: Civil society’s job is to hold the government to account instead of allowing the government to tell us to do our job. The basic problem is that the economy has to revive and it can’t revive via manipulation, bamboozling, lying, cheating, and bullying. So you have to do the things that will make it revived and our job as civil society is to demand that the government do all the things that will revive the economy and preserve us from other public health disasters.

(Jayati Ghosh is Professor of Economics at Jawaharlal Nehru University in New Delhi. Article courtesy: Number13, an India online illustrated-explainer journal.)

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The Lockdown Backfired and Modi Has Only Himself to Blame

Prem Shankar Jha

At the beginning of India’s national lockdown, Prime Minister Narendra Modi asked the nation to endure the coming disruption of their lives with stoicism.

“The Mahabharata war was won in 18 days, this war the whole country is fighting against coronavirus will take 21 days,” he said on March 25 in an address to the people of Varanasi.

Not for the first time in the past six years, Modi made a promise he could not keep. On March 25, when the lockdown began, there had been 606 reported cases of COVID-19, of which 87 had been added in the previous 24 hours. As of the time of writing, the corresponding numbers are in excess of 2.97 lakh, rising by an average of 10,000 a day.

The only sliver of a silver lining today is that the ratio of daily recoveries to new cases has been rising steadily and is now almost 50%. The current spike, mostly attributed to migrant workers returning to their home states, has slowed this to a snail’s pace but not stopped it altogether. If the trend is maintained, the number of active cases will reach a peak and begin to decline in two-three months from now, i.e five-six months after the declaration of the lockdown. That will be a far slower start to recovery than any other country has witnessed from similar lockdowns so far.

What went wrong? The experience of most western European countries has shown that the tougher the lockdown, the sooner has a country reached a peak in the daily addition of cases, the more rapid has been the decline afterwards. When asked why this has not happened in India, BJP ministers and spokespersons, and government officials have brushed the question aside, in essence saying that those are rich nations and our problems are entirely different.

Malaysia’s lockdown

But if that is so, how do Modi and his government officials explain the extraordinary success of Malaysia, a middle-level industrialised nation that was far poorer than us only 40 years ago?

In many ways, the Malaysian government ’s lockdown experience has been similar to ours. It announced a national lockdown on March 18, six days before we did, designed to end on May 12 a week before our phase 3. But on May 4, under pressure from industry, when it lifted some controls on public transport, and congregation in workplaces, four out of its 13 states refused to implement these. On May 10, following a public petition signed by half a million Malaysians, it extended this partially relaxed lockdown for another month till June 9.

It is the impact of the two lockdowns that has been starkly different. For unlike ours, Malaysia’s has been a total success. The infallible yardstick there, as here, is the new case to recovery rate ratio. Starting from 13% of new cases on March 18, the recovery rate rose rapidly till it exceeded the number of new cases for the first time on April 6 and then stayed above it for 53 out of the next 64 days till the lockdown was lifted on June 9. By June 8, the total number of COVID-19 cases the country had experienced was 8,319. The number who had recovered was 6,694 – 80%. The number of new cases on June 8 was only seven.

Malaysia’s success cannot be ascribed to a higher level of development, better health service or more efficient administration. It arises from the government’s very different concept of its duty towards its people. From the incipient, planning stage of the lockdown, the government recognised that the severe dislocation of the economy it would cause could not be compared to an economic recession or a natural disaster. The first resulted from vagaries of the domestic and international market and could be mitigated by countervailing policy measures. The second could be as catastrophic as a lockdown but the government could not be blamed for it. But the lockdown was a conscious act of government. It therefore imposed a specifically moral obligation upon the government to make sure that the victims – employers and employees – suffered as little from it as possible. Malaysia’s Prime minister, Muhyiddeen Yassin accepted this from the outset. Modi did not and still has not.

The Malaysian government, therefore, recognised that the lockdown would cause a crash in sales and drying up of revenues. This would make it difficult for employers to meet their fixed costs and wage bills, and destroy income and demand. This had to be prevented at any cost. The government, therefore, decided to spend whatever was needed to meet the production and minimum wage and salary costs that would have to be paid to keep factories in working condition and workers in place to resume work when the lockdown was lifted. It estimated that this would require it to provide fiscal stimulus of up to 14% of its GDP. Indeed its preliminary estimate was 17%. This was the highest deficit financing limit set by any country in the world.

As a result, Malaysia has suffered little or no social or economic dislocation from the lockdown. Although a large part of its 15.8 million labour force consists of internal migrants, and several million more are foreign workers, the sudden loss of income, home and security that has driven more than 10 million despairing migrant workers in our country to set out for homes in distant villages by any means possible is signally absent. Instead, the government has put pressure on employers to register their undocumented foreign migrant workers and provide them with the dormitory accommodation that is required by law. Their number, fortunately, is relatively small because, again unlike us, the state has a law that requires employers to register all new employees with the social health authority within 30 days of hiring them.

India’s lockdown has failed because the sense of moral obligation that has driven Malaysia’s policies is completely absent. In its place Modi made prayashchita (atonement) the guiding principle of policy: a great evil had descended on the world. To fight it, one had to be willing to suffer.

Crash in demand

The crash of demand that has followed the lockdown is, therefore, one that no other economy has experienced. The demand for electricity fell by nearly 30% in April. The demand for transport fuels fell so sharply that oil refineries had to halve their production.

Maruti, the automobile industry leader, did not manufacture a single car or commercial vehicle in April and almost none in May. It met the few export orders in hand from stocks that had accumulated after the sudden imposition of the GST last year.

Bajaj Motors, the other Indian automotive giant, sold no vehicles in India in April. It continued to produce at a skeleton level, but entirely for export. Even there it experienced a fall of 80% in sales (32,009 two-wheelers and 5,869 three-wheelers in April, against 160,393 two-wheelers and 38,818 three-wheelers in the same month in 2019).

SIAM, the Society of Indian Automobile Manufacturers has predicted that if a demand boost does not come now production this year will decline by 35-40%. And ACMA, the Automobile Manufacturers’ Association says that it has lost $57 billion dollars worth of sales. This is 2-3% of India’s GDP.

The textiles industry is in equally bad shape. A survey of 2,000 firms by A.C. Nielsen showed that their production had dropped by 84% since the lockdown. Much of what was still being produced was personal protective equipment (PPE) clothing for health workers. The textiles industry employs 105 million workers, second only to agriculture. Thus most of the 114 million persons who lost their jobs by the beginning of May were probably from this industry.

The construction industry, which used to create 40% of India’s non-agricultural new jobs every year, is in a coma because, with the departure of migrant workers, it faces an acute shortage of labour, rising wage rates and lower EMI payments by financially stressed homeowners.

And finally, there are the travel, hospitality and entertainment industries that account for a quarter or more of the GDP and are, collectively, the largest employer after agriculture. These have been hit both by the need for social distancing and the sharp fall in income and demand in the economy.

Had India done what Malaysia did – kept everyone where they were by ensuring that their economic futures were not imperilled by the lockdown, the number of COVID-19 cases would have peaked very much earlier, even in the most crowded of our cites, and the virus would not have been carried to the villages. Best of all, the economy would have remained poised to jump back to normal the moment the lockdown was relaxed.

But Modi had other goals. He wanted to emerge from the battle against coronavirus as Arjuna had emerged from the battle of Kurukshetra, steely, determined and invincible. Now that he has exposed his own lack of capacity to deal with real as distinguished from self-manufactured emergencies, instead of changing course and pumping purchasing power into the economy, he is busy fashioning another image of himself as the lone champion of ‘self-reliance’ in an increasingly ‘sold out’ economy.

One can only hope that when this too fails, India’s voters, who placed their faith in him for a second time in May last year, will recognise him for what he is.

(Prem Shankar Jha is a Delhi-based journalist and writer.)