Measures for Lockdown Shock Bearing Capacity of Indian Economy

Prof.M.M.Goel

– Prof.M.M.Goel*

For me lockdown was a shock on March 25, 2020 with a pinch of salt. As Indian, I confess that I may be shame proof but not shock proof.  I have heard of a shockproof watch which is not easily damaged if hit or dropped. But I fail to comprehend the shock bearing capacity of the Indian economy dependent to some extent on the informal sector. I know many Indians don’t have the capacity of buying food for a day with no purchasing power. There are enough beggars in my beloved India who manage their survival. But there are people who cannot beg but want to work to earn their livelihood which has become difficult during lockdown.

The nature and extent of the actual impact of lockdown would depend on the severity and duration of the outbreak which is still unknown. The impact of covid is being felt across sectors including   tourism, MSMEs and retail among many others.

To restart the economy, it is believed that India will have to resort to a sweeping nationalization of some if not many things including religious places having sufficient gold and wealth. To lower the future obligation by giving a chance for survival, existence and excellence to those who have shock bearing capacity, we need to ask those stakeholders to take the initiative for the recovery of the economic cost of the lockdown in evolutionary manner.

To reduce covid spread, the lockdown have been giving both a demand and a supply shock to the Indian economy. Indians cannot spend because of social distancing and the physical restrictions and only few factories are running at their lowest capacity. It is written on the wall that a precautionary increase in savings and reduction in discretionary consumption, especially on travel and recreational services, will weigh on the growth rates in post covid era.

The biggest lockdown of the world that shut a majority of the factories and businesses, educational institutions, suspended flights, stopped trains and restricted movement of vehicles and  the people at large, This historical lockdown might have cost the Indian economy of at least  Rs 10 lakh crore during the lockdown period which is still uncertain.

To contain the spread of covid, Prime Minister Narendra Modi announced a nationwide complete lockdown with effect from March 25,2020  that brought as much as 70 per cent of economic activity, investment, exports and discretionary consumption to a standstill. Only essential goods and services such as agriculture, mining, utility services, some financial and IT services and public services were allowed to operate.

 It has been estimated by Acuite Ratings & Research Ltd that the lockdown will cost the Indian economy almost $ 4.64 billion (over Rs 35,000 crore) every day.

The accumulated losses to truckers during the first 15 days of lockdown were about Rs 35,200 crore given an average Rs 2,200 loss to per truck per day. More than 90 per cent of the about one crore trucks in India are off  the roads during the lockdown as truckers with only essential commodities are on the move. Even if the lockdown is lifted, it will take at least 2 to 3 months for truckers to limp to some normal scale as apprehended consumption of non-essential items to fall considerably.

From the economic point of view, the crisis is bigger than expected difficult to quantify but implications for the global economy including India in terms of recession  (if not depression), bankruptcies, unemployment, underemployment, farmers suicides, white-collar crimes, terrorism, exploitation, discriminations, deprivations and discontent among the stakeholders.

It is clearly written on the wall that the cumulative loss of around $9 trillion to global output over two years as estimated by IMF. As India has taken the tightest lockdown in the world for flatting the covid curve, we will have the proportionate economic consequence with all of the weaknesses, limitations, threats and challenges.

My intention is clear to draw attention of the government on certain challenges which I foresee in post covid era including discontent among various actors of the economy leading to agitations by the trade unions including government employees for the discriminatory approach towards them including freezing the dearness allowance (DA) which is a compensation for the inflation in the economy.

  If we look at the growth forecast that is currently ruling around is – Western Europe is go down with -6%, America little lower with -2.8%, and China is up by +1% and India +2.1%. Being optimistic needonomist ,I believe that the growth rate is a relative concept and if honest efforts are being made to revive, we will prove to be the fastest growing economy (the concept of Hindu Growth rate convey the built in capacity of the economy ) if we take certain measures like converting Khadi Village Industries Commission (KVIC) into MNC for giving a brand name to the goods produced by MSME which are just surviving and need cooperation of this kind more than stimulus  to compete in the global market. We need rainbow revolution in the agriculture sector with full sensitivities of the stakeholders including three tier government of the federal India.

Once the battle against the virus is over and economy has to kick start again and reboot.

 The V shaped curve of revival appears to be difficult but not impossible as we have ‘demographic dividend’. The proper mix of the policies and programs without hypocrisies of Swadeshi in a closed economy but open economy with self-reliance as an objective , we can do wonders but calls for discipline at all levels in various sectors of the economy.

The wave upon waves, people across the states and cities returning to their native places in the villages. Being Needonomist, I call it an opportunity to revive the Indian rural economy faster than the overall economy but calls for providing urban facilities in rural areas known as PURA by Late APJ Abdul Kalam former President of India.

.      As of April 12, 2020, India’s unemployment rate has risen to 26%, according to the recent report. So, what would happen to the employment in India after covid? And what will happen to the daily wagers, professionals, who lose their jobs? And what are the measures we need to take, to tackle the unemployment in India?

 I always look towards unemployed and underemployed youth to be terrorist who deserve empathy (not sympathy). But sadly there are many who are careless and useless and not employable by the employers. The real challenge is how to make them careful and useful with discipline. To tackle the increased unemployment in post covid India is a challenge and calls for jobs to be created which needs discipline in the economy. To do so, there is a strong case for compulsory five year military service as being practised in South Korea

There is a less cash flow in the Indian economy, there is demand  for the stimulus packages for the revival. To my mind, for faster  revival of the  Indian economy, we need more than stimulus package which is inevitable , removal of fear with fearlessness and work without worries (www)- the real www instead of the virtual www.

To serve the common good to the common man (human being -gender neutral) with common-sense approach, we need to mobilise the human conscience with faith.

Th imparting  education through the internet by using WebEx, Skype, Zoom, and MS Team etc.  In present times, use of internet is not luxury but necessity. The skills in information technology (IT) are necessary for survival and existence with AI but not sufficient. To make it sufficient, we need morality, credibility and accountability (MCA) more than the degree of MCA as masters in computer applications.

But completely replacing educational programs towards online is not good . I believe, the online system of education will deteriorate the standards which are desirable for the economies of the world including India. There is always a trade-off between quantity and quality and in the name of quantity we forego quality. I have firm faith that online education cannot be substitute of offline education in institutional setup. Both can coexist but cannot survive long in isolation. The issues are to be resolved at all levels with healthy discussions is the most practical approach to be adopted.

In my well-considered opinion, we need to adopt the principle of Needonomics and become street SMART and SIMPLE and observe the things with optimism and hope to revive as soon as possible. It is difficult to predict the time period but may be normal in 2030 which is the targeted year for 17 SDGs in the global economy. We need one voice to come out of crisis by fuelling the faith in all the stakeholders of the economy.

To re-establish the economy, we need honest, humane and hardworking human resources capable to handle AI with real education as a proper, productive and practical (3P) use of hands, heads ad hearts (3H), we can achieve morality, opulence, victory and empowerment to participate in the socio-economic development with common sense approach in post covid era.

To make India rich in all its dimensions, we need real education with changed mind-set by accepting the realities of built-in inequalities in terms of gender, education, income and wealth etc. The richness lies in the art of giving and not taking and must be focussed in the educational programmes.  We, the people of India need to become ‘Trustees’   not owners of the wealth and properties for enhancing the shock bearing capacity if not becoming shock proof  for the  lockdown  making history of its own.

*  The writer is Former Vice Chancellor and known as ‘Needonomist’ (economist for needs) among the fraternity of economists  in India