M.K Narayanan – India and the COVID-19 Epidemic

M.K Narayanan – India and the COVID-19 Epidemic

In recent years, it has been common for commentators of the Indian scene to refer to “India Unbound”, inspired by Aeschylus’s ‘Prometheus Bound’ (of Greek mythology) married with Poet Shelley’s four act masterpiece ‘Prometheus Unbound’ (written several centuries later), in which Prometheus emerges successful from his travails. As in Shelley’s piece, Indians were feeling confident (till recently) that India had overcome its travails of recent Centuries and was once again beginning to be seen as a key player on the global scene. In recent decades, India claimed to have created an over three trillion- dollar economy and aspired to become a five trillion-dollar economy in the not too distant future. There were also predictions that India was all set to overtake China in growth terms as its economy surged and China’s appeared to flag.


What was perhaps not anticipated as the 21st Century advanced, was how dramatically the world was changing and becoming more complicated. Geo-economics and a declining world economy, apart from domestic factors, had by 2017-18 already begun to impact India’s growth story. India’s GDP growth had dropped from around 7% to well below this figure and is hovering presently at around 4.8%.


2020 brought in its wake a host of new problems. Apart from political issues such as the revocation of Article 370 of the Indian Constitution (as well as restrictions on democratic rights in Kashmir), and the enactment of the Constitution (Amendment) Act (CAA) in Parliament, (which was viewed by a sizeable section of the population as discriminatory and fueled widespread protests leading to a communal riot in India’s capital, Delhi), the financial sector was beset by several problems. Sizeable numbers of NPAs affecting the Banking sector, and the near collapse of a couple of major Private Sector Banks shook public confidence. All this seemed to remove much of the sheen from India’s growth story.


Adding to India’s woes has been the new Corona Virus outbreak, COVID -19. In the weeks since China reported the first outbreak in Wuhan, and even as the threat gained an epidemic dimension (now declared a pandemic by WHO), India reacted with a mixture of concern, confusion and dire predictions as to what lay in store.


It is a known fact that Indians today are to be found in different parts of the globe: as students, workers, professionals and tourists. Several have found themselves in epidemic hotspots such as Wuhan in China, the Far East, Iran and West Asia, Italy, France and the US. Stories put out by the initial group of returnees did produce something of a near hysteria across much of urban and semi urban India.


Estimates as recent as Mar 20, suggest that the total number of COVID-19 positive Indians is over 450, with around 150 being active COVID-19 cases. The death toll in the COVID-19 epidemic in India has gone up to 5. Roughly two-thirds of Indians who have been identified as COVID-19 positive contracted the disease while overseas. More than 14 lakh international passengers have since been screened across airports while entering India.


States and cities most affected today are Maharashtra, Kerala, UP, Haryana, Telangana and Karnataka, apart from Delhi. In the past couple of days, new cases have been reported from Gujarat, Chhattisgarh, Uttarakhand, Andhra, Rajasthan, Tamil Nadu and the Punjab. The speed with which the virus is beginning to spread is causing considerable alarm. 54 new cases have been reported in the past 2 days alone.


In economic terms, India is among the 15 most affected economies, by the COVID-19 epidemic, and the economic slowdown in China. The trade impact of the COVID-19 epidemic in India is believed to be around USD 380 million. The impact is estimated to be maximum to the Chemical sector (around USD 129 million); Textile and Apparel sector (USD 80 Million); the Automotive sector (USD 40 million); Metals and Metal products (USD 30 million); Wood products USD (18 million); Leather products (USD 15 million); Electrical and Machinery (USD 12 million).


The Confederation of Indian Industry estimates that all industrial segments are suffering to-day. The real estate sector is in dire straits, and new sales may be hit even more badly amid a surge in loan defaults and cash constraints. Retailers are facing large scale closures. The stock market is plunging. Rating agencies are already drastically reducing India’s GDP growth rate, citing the COVID-19 impact alongside the existing stress in the financial sector. The dire prediction, hence, is that India will require up to 6 months to restore normalcy and business continuity -even after the entire course of the COVID-19 epidemic is over.


The estimate of the Asian Development Bank over a week ago, was that COVID- 19 may cost the Indian economy USD 29.9 Billion. No fresh estimate is available. As it is, even the earlier estimate was based on a surmise that perhaps the worst of the epidemic was over. This is hardly the case. It appears that while China has presumably contained the spread of the virus – no new cases were reported in the past two days – this does not seem to apply to most other affected regions. Italy is a case in point, where the number of deaths as a result of the epidemic, currently exceeds that in China. In India, initial estimates have proved way off the mark. As against a mere handful of cases initially, the numbers have steadily increased to more than 150 who are identified as COVID-19 positive, and at least another 300 in the danger zone. Authorities believe that there could be many more cases even as the epidemic spikes in the coming weeks, notwithstanding the efforts made to contain the epidemic.


In the face of the growing concerns across the country over the COVID-19 epidemic, and the adverse impact that this was having on the economy, Prime Minister Modi took the exceptional step of addressing the Nation on Television on March 19. In this he spelt-out a number of steps, some of which are extremely unusual in peace time, and when a nation is not at war.


Prime Minister Modi observed that the pandemic was a serious, global crisis, “involving more countries than any previous natural or political crisis, even during World vaccine to counter the Corona Virus, he announced a series of ‘calls to actions’, as also the setting up of a COVID-19 Task Force under the Finance Minister, to come up with measures to mitigate some of the economic hardships engendered by the pandemic. Among the steps highlighted by him were: a self-imposed ‘Janata Curfew’ (people’s curfew) on March 22; social distancing; avoidance of panic buying, especially of essential items including medicines; urging senior citizens (above 60) to avoid coming out in the next couple of weeks; asking people to avoid elective surgery or routine checkups so as not to over burden the health services; and urging employers to look after the interests of the staff and not to penalise them in case they are unable to attend work due to travel or other considerations. Given the rumours fed by the social media, peppered with fake news, the Prime Minister also urged the people to stay away from rumours.


Already, and well prior to this, India had announced a series of stringent measures, restricting travel to and from India of both nationals and foreigners. Among the steps initially announced were the suspension of visas to India of nationals from China, France, Italy, South Korea, Germany, Spain, Japan and Iran. This also included e-visas. Visas and e-visas granted to other foreign nationals, who had travelled to China, Iran, Italy, South Korea, Japan, France, Germany and Spain stood suspended. (The Government has since banned all international flights to India from March 22 to 29). Advisories were also issued to Indians travelling to more than 100 countries across the world which had reported cases of COVID-19, making them aware of the prevailing situation.


Within India, citizens have been directed by the Health Authorities to take several precautionary measures, based on guidelines in vogue for preventing pandemics of this kind in different parts of the globe. US guidelines for preventing ‘pandemic influenza’ have been one of the important measures actively considered in this connection. Likewise, lessons learnt from the steps taken by Kerala State (following the NIPAH outbreak and epidemic in 2018) have been incorporated in the prophylactic measures being put in place. Steps like ‘home isolation’ and ‘home quarantine’ are being highlighted as vital to prevent the spread of the disease. Schools, colleges and other educational institutions remain closed. Examinations have been postponed. All large- scale gatherings, including religious functions, marriages and other social occasions, have by and large been put on hold. Offices are working with skeletal staff, and employees are being encouraged to work from home. Social distancing has become the prescription for avoiding contamination by the Corona Virus – the main thrust being that since the virus is transmitted more by surface contact- avoidance of social proximity is a sine-qua-non.


While the majority of those initially affected by the Corona Virus were so infected while abroad, more and more cases are now from within the country. Public health capabilities are by no means uniform across the nation. Southern states are far better equipped to deal with an epidemic of this kind, while the Central, Northern and Northeastern States tend to lag behind. Fortunately, hardly any case has been reported from the Northeast so far; it could then well prove to be the Achilles Heel of India’s public health system.


The virus epidemic provides India with both a challenge and an opportunity. At this moment the challenges appear, if anything, greater than the opportunities. Undoubtedly, COVID-19 has dealt a severe blow to India’s faltering economy. The growth rate, estimated to be below 5% at present, it is feared could dip still further. Investor confidence is at a low ebb. Consumer spending has been adversely affected by the economic downturn. The situation created by the economic downturn and the COVID-19 epidemic, seems indeed bleak.


There is, however, no reason for India to be unduly pessimistic. India’s fundamentals are strong. The country does not lack strong leadership. It is one of the few democracies anywhere, where the Government in office has an absolute majority in Parliament. It is far better positioned than most democracies to take strong measures, where needed. Despite the economic malaise, and now COVID-19, there is no hint as yet of any violent protest against the policies or the inadequacies of the Government. Admittedly, the government appears hamstrung at the moment, unable to take firm steps to deal with recent agitations such as the CAA, but this does not mean that it cannot resort to firm measures when needed. There are no indications on the horizon as yet, that the present circumstances posit a direct challenge to the government, or that the latter may find it difficult to deal with any such situation. Quite the contrary.


What could perhaps become more problematic in the longer term – and does probably need to change – is ensuring better focus on, and better direction, to economic policies. These were already deemed inadequate to meet growing challenges. The situation is likely to worsen further on account of the COVID-19 epidemic. While this is a matter of concern, it by no means presents a threat to the Government or the country as of now.


On the other hand, there are quite a few opportunities that could become available for India. China’s near collapse as the world’s supplier of manufactured goods following COVID-19, provides India with a set of opportunities. India possesses a large, as well as a young, workforce. Given their intrinsic capabilities, it presents a one-of-a-kind opportunity for India to challenge China’s previous monopoly in the area of manufactured goods. India may not be in a position to displace China as yet, but it is, nevertheless an opportunity that has presented itself.


The decline in the price of oil also affords India an advantage. The high price of oil has been a major impediment to India’s growth story. The combination of cheaper oil and the absence of China as a manufacturing behemoth, has put India in a better position today. Whether India can reap the benefits of this in time, rather than being overtaken by concerns about the COVID-19 epidemic, is yet to be seen.


It is, no doubt, uncertain that a youthful population and a hot and humid climate limits the onset of the Corona Virus, or at least, its danger potential. The jury is still out on this aspect. Nevertheless, it a proven fact that the corona virus is far bigger threat to countries with aging populations, and India is one of the few countries in the world that has a huge wealth of young and able people. It is, thus, for India to see how best it can take advantage a combination of factors mentioned here viz a youthful and able population, a stable government, a strong leadership and an inherent optimism about its future.


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