{"id":1497,"date":"2020-05-24T20:36:27","date_gmt":"2020-05-24T20:36:27","guid":{"rendered":"http:\/\/wordpress.test\/india-and-covid-19-crisis-radical-measures-needed\/"},"modified":"2023-04-19T10:18:46","modified_gmt":"2023-04-19T10:18:46","slug":"india-and-covid-19-crisis-radical-measures-needed","status":"publish","type":"post","link":"https:\/\/globaldev.blog\/india-and-covid-19-crisis-radical-measures-needed\/","title":{"rendered":"India and the Covid-19 crisis: radical measures needed"},"content":{"rendered":"
\n

India faces an unprecedented emergency as a result of the pandemic and lockdown. This column calls for radical measures to resurrect the economy over the short, medium and long run. The government must undertake a massive institutional effort and inject an enormous amount of money to reinvigorate the economy from the bottom.<\/strong><\/em><\/p>\n<\/div>\n

India, the world\u2019s largest democracy, is locked down \u2013 forcefully \u2013 caught now between the Scylla of the pandemic and the Charybdis of economic catastrophe. While the specter of Covid-19 is haunting the whole world, the darkness of lockdown has descended upon India\u2019s phenomenally large and disadvantaged population engaged in petty farming and a myriad of other non-farm informal activities.<\/p>\n

In these circumstances, India must think big to sustain life during this unprecedented emergency and to resurrect the economy in a post-Covid-19 world. The massive scale and deeply unequal nature of the impending economic disaster should compel us to veer away from the popular policy discourses relying on capitalist growth based on an impersonal, autonomous market<\/a> system, and especially on more intensive use of labor<\/a>, for post-lockdown economic recovery.<\/p>\n

Such strategies may be both grossly inadequate and deeply exclusionary. They may even be intensely exploitative and unethical for the vast majority of the informally engaged and disadvantaged workforce.<\/p>\n

Facts<\/strong><\/p>\n

Let us have a look at the enormity and deep deprivation of India\u2019s informal sector and the petty farmhands and farmers.<\/p>\n

Table 1, which presents shares of the sectoral workforce, shows that the non-farm informal sector (even excluding the vast informal construction sector), and especially agriculture, is mind-bogglingly large.<\/p>\n

Table 2 presents partial labor productivity, a proxy for average labor income. The productivity levels of formal manufacturing and services are very high compared to those of agriculture and informality, and these absolute differences have been widening over time, leading to deepening deprivation.<\/p>\n

Table 1. Percentage shares of sectoral workforce in India<\/p>\n\n\n\n\n\n
\n

Year<\/p>\n<\/td>\n

\n

Non-farm informal sector<\/p>\n<\/td>\n

\n

Agriculture<\/p>\n<\/td>\n

\n

Formal manufacturing<\/p>\n<\/td>\n

\n

Other sectors<\/p>\n<\/td>\n<\/tr>\n

\n

1999\u20132000<\/p>\n<\/td>\n

\n

19.02%<\/p>\n<\/td>\n

\n

61.01%<\/p>\n<\/td>\n

\n

2.03%<\/p>\n<\/td>\n

\n

17.88%<\/p>\n<\/td>\n<\/tr>\n

\n

2010\u201311<\/p>\n<\/td>\n

\n

21.96%<\/p>\n<\/td>\n

\n

51.93%<\/p>\n<\/td>\n

\n

2.71%<\/p>\n<\/td>\n

\n

22.27%<\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Source: Calculated from NSSO and ASI reports (Government of India) and Reserve Bank of India database.<\/p>\n

Note: Other sectors include mainly formal services and formal-informal constructions.<\/p>\n

Table 2. Partial labor productivity (annual) of different sectors in India (in rupees at 1993\u00ad\u00ad\u201394 prices)<\/p>\n\n\n\n\n\n
\n

Year<\/p>\n<\/td>\n

\n

Non-farm informal Sector<\/p>\n<\/td>\n

\n

Agriculture<\/p>\n<\/td>\n

\n

Formal manufacturing<\/p>\n<\/td>\n

\n

Other sectors<\/p>\n<\/td>\n<\/tr>\n

\n

1999\u20132000<\/p>\n<\/td>\n

\n

14,137<\/p>\n<\/td>\n

\n

10,463<\/p>\n<\/td>\n

\n

165,871<\/p>\n<\/td>\n

\n

57,668<\/p>\n<\/td>\n<\/tr>\n

\n

2010\u201311<\/p>\n<\/td>\n

\n

18,051<\/p>\n<\/td>\n

\n

14,858<\/p>\n<\/td>\n

\n

299,593<\/p>\n<\/td>\n

\n

100,462<\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Source: As Table 1<\/p>\n

The nationwide lockdown has only worsened the plight of the millions in these categories with threats of large-scale job losses looming large<\/a>.<\/p>\n

What is to be done<\/strong><\/p>\n

To contain the impending disaster, we need to undertake some truly radical steps, not only in the short and medium run, but also in the long run.<\/p>\n

Short run: saving lives<\/em><\/strong><\/p>\n

Millions of jobs are already lost. Incomes have stopped and supply lines are snapping \u2013 especially for informal manufacturers and service providers, informal wage workers in the formal and informal sectors, and marginal and small farmers along with their laborers.<\/p>\n

All these people badly need food and essentials \u2013 and these have to be delivered (through the public distribution system, PDS, and\/or through rural panchayats<\/em> and urban municipal wards<\/em>) to their doorsteps and at the shelters for migrant workers.<\/p>\n

A major complementary mechanism could be nationwide provisioning of a \u2018midday-meal\u2019. Thus, a partially implemented (strictly-sanitized) \u2018mass kitchen\u2019 could be universalized, and the extensive network of the school system (which already has expertise in delivering midday-meals) could be used. These existing institutions and mechanisms should be beefed up, and the huge buffer stock<\/a> with the government should be used in this time of acute distress, instead of (most ironically) using it for sanitizers and biofuel production<\/a>.<\/p>\n

The harvest season has already arrived, and a judicious procurement (via existing public and private channels) and distribution strategy (via PDS, a midday-meal network, panchayats and wards) should be formulated immediately to save the farmers from income loss, the multitude of agricultural laborers from joblessness, as well as the millions of non-farm poor from starvation.<\/p>\n

Most importantly, even if these processes are financed by printing new money (and not through redistribution via a tax-subsidy mechanism), it will not be inflationary. Rather strikingly, it could induce overall economic growth<\/a>:<\/p>\n