As we try to flatten the viral curve, we must ensure a graded but sure opening of economic activities and avoid a collapse
Let’s face it, the trudge back to normalcy won’t be easy at a time when we have to seemingly live with the virus, contained and tamed somewhat, but not completely eradicated till a vaccine or cure is developed. The earliest that could happen is almost a year away. Till then, there will be insurmountable challenges. One, of course, is keeping the nation’s human resource healthy. The other will be the health of the economy itself, which needs to be oxygenated, for more people could die out of poverty, joblessness and food crisis than the virus itself. The economy will be on a slow run for a while, just to keep going. But short-term measures and holding strategies are needed before one can look at aligning them with or even conceive of long-term structural reforms. In the first stage, both the Centre and the States are looking for ways to get the April harvest going so that standing crops do not go waste and there is no food scarcity a couple of months down the line. The flight of migrant labour has worsened manpower strength and the increasing disease burden may endanger harvesting in high cluster States. While the so-called green zones, or States where the virus has had minimal impact, might be given the go-ahead, pool testing will be needed in affected States, for example Punjab, to work out safe areas where harvesting and processing can resume. There will be added disinfection and hygiene protocols that will add to input costs, be it in agriculture or industrial units. While agriculture will give us basic food, units producing essential items need to get going, like pharma, chemicals, packaged food items, soaps and detergents as well as the dairy sector. With units running below capacity due to the lockdown, their owners are facing multiple issues — from struggling to get permissions from each State Government for operations, to finding labourers, who have either taken a journey home or are unable to report to work due to the strict enforcement of stay-at-home orders, and finally closing gaps in the existing supply and distribution chain. Here, too, the Government is considering a staggered resumption, grading permits Statewise depending on the spread of COVID-19.
Clearly, there’s a need for a Central intervention to boost production and keep to health protocols uniformly. So the Government is taking recourse to an Independence era law; it wants to amend the Factories Act, 1948. The amendment calls for extending the working hours of healthy workers — from the current eight hours, six days a week (or 48 hours) to 12 hours, six days a week (72 hours). Besides, the workers would be paid in consonance with the number of hours. This will not only speed up production but can also ensure limited physical movement of the workers, thus saving them from the prospect of being exposed. It would also mean restarting production lines to a higher capacity. Of course, everybody is looking at a big stimulus package, one that ensures working capital, particularly to micro, small and medium enterprises, and saves jobs. Mind you the bigger manufacturing sectors — construction, infrastructure, automobiles, transport, consumer goods, real estate — are already on pause button. The emergent growth drivers like travel and tourism have flatlined already. In such a scenario, there is no big push from anywhere, merely a subsistence formula that can just about keep the economy greased for running when required. The impact of the lockdown, joblessness and furloughs means there will be a larger weakening of domestic demand and disruptions in the financial market. Some experts have suggested borrowing not only from the market but knocking on the RBI’s door. These are indeed tough decisions that require collective wisdom more than anything else. Of course, Prime Minister Narendra Modi has already initiated a consultative process with industry captains and financial experts, including his predecessor and undoubtedly a top economic brain, Manmohan Singh. Even former RBI Governor Raghuram Rajan has sunk his differences with the present regime, saying he is prepared to help a COVID-stressed Indian economy if asked. In fact, just like cooperative federalism that is on full display, India needs a council of economic warriors for a cohesive battle strategy.