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India’s Path to 10.8 Million Covid-19 Cases: Socio-Economic Impact and State Response

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This article is part of the series on “COVID-19 in the Middle East and Asia: Impacts and Responses”. Read more …


India is the second-worst affected country by COVID-19 in terms of overall case numbers (10.8 million), accounting for just over one-tenth of the world’s confirmed cases and having suffered more than 155,000 deaths.[1] And these disturbing numbers — both in case loads and fatalities — continue to climb. The pandemic has also led to a large-scale economic disruption across various sectors and in all parts of the country. International multilateral institutions such as the International Monetary Fund (IMF) and the World Bank (WB) are forecasting additional job losses and a sharp economic contraction throughout the world, including in India.

In a March 24, 2020 press conference in Geneva, Michael Ryan, Chief Executive Director of the WHO’s Health Emergencies Programme, remarked in a press conference in Geneva that India had “tremendous capacities” to deal with the coronavirus outbreak and that “it is exceptionally important that countries like India lead the way to show the world what can be done.”[2] As governments continue to grapple with COVID-19, it is imperative to study which measures have been effective and which have not. This article takes a brief look at the actions the Indian government has taken to respond to the pandemic.

The Toll and Trajectory of Covid-19 on India  

The first case of coronavirus in India was reported on January 30, 2020. In the ensuing months, the number of confirmed cases of the virus and the deaths caused by it skyrocketed. 

India’s infection rate is reported to be significantly lower than the worst-affected countries while the fatality rate — measuring the number of deaths against the number of confirmed cases — has been consistently low (i.e. 1.44 %).[3] The imminent deployment of anti-covid vaccines has infused fresh hope that the deadly virus may soon be on its way out.[4] Yet, in the meantime, the daily case count continues to mount.[5]

COVID-19 has also dealt a severe blow to the country’s health care system and infrastructure, exposing large-scale vulnerabilities in terms of the lack of testing facilities, personal protective equipment (PPE), trained nurses and doctors, and ventilators along with shortage of beds and hospitals for virus-infected patients. India currently has just one bed per 1,000 patients and five patients per doctor, well below the World Health Organization (WHO) prescribed minimum standards of three beds per 1,000 patients.[6]

If this be the case and assuming that there could be a rebound in cases during the winter or thereafter, it is estimated that by the end of the first quarter of 2021, the government would need to infuse approximately $2 billion to improving the healthcare systems. Six times that amount would be necessary over the next decade to create about 2.5 million hospital beds.[7] This is one of the key issues that Indian public health experts, economists, and the national as well as regional governments in the country are seized with.

The pandemic has caused enormous economic distress, as India has entered the most severe recession since the mid-1990s, the year when India began its economic reforms programme, attracting foreign direct investments (FDIs). The GDP growth rate, which had been on a downward trajectory since 2015-16, has even further contracted following the pandemic caused by a long periods of national lockdown. A report by the UN Conference on Trade and Development (UNCTAD) issued in September, 2020 forecast that the Indian economy will have contracted by 5.9% in 2020. The same report also stated that “the contraction registered in 2020 is likely to translate into a permanent income loss.”[8] A June 2020 survey of small- end medium-sized businesses (SMEs) by the All India Manufacturers Organization warned of a “mass-destruction of business.”[9]

During the current COVID-19 period, according to a report submitted to the Indian Health Ministry, it is also estimated that anywhere between 22-25 million laborers have left their places of work in urban centers and migrated back to their villages for the want of employment.[10] Some 200 million migrant workers in India are also estimated to be severely affected due to the virus and to be fully or partially out of full-time employment.[11] Added to this number are those in rural areas whose livelihoods have been severely disrupted and have less likelihood of return to normal anytime soon.  

The National Lockdown: Its Costs and Its Consequences

On March 24, 2020, the Indian government made a bold decision to impose an initial 21-day nationwide lockdown on the country’s more than 1.3 billion people — a measure subsequently extended through the end of May. The initial stage of the lockdown restricted people from leaving their homes; suspended all transport services (except for delivery of essential goods and services and for police, fire, and emergency services); and shuttered all educational institutions and manufacturing facilities. In early June, the Ministry of Home Affairs (MHA) issued fresh guidelines for the phased relaxing of restrictions and “unlocking” of the economy.

The Oxford COVID-19 Government Response Tracker (OxCGRT), in its report based on data from 73 countries, reported that the Indian Government responded more stringently than other countries in tackling the pandemic. The day after the lockdown was initiated;  OxCGRT awarded India a perfect score of 100.[12] A news report to this effect published on ABC Live India bore the headline: “India Starts World’s Largest Social Distancing to Defeat COVID-19.”

Several epidemiological models and a number of other sources have credited the early lockdown with having slowed the spread of the pandemic and averted a much higher death toll. In a survey conducted in August 2020, 70% of respondents said the lockdown and related measures had saved (many) lives.[13]

However, the lockdown measures came at a fairly high economic and physical cost. Its sudden implementation had a severe impact on millions of low-income migrant workers and daily-wage earners. Migrants returning to their villages (from urban centers of their work) on foot or fleeing overcrowded and unhealthy quarantine centers, in turn, placed an enormous burden on the already fragile rural healthcare infrastructure.

Given that the national economy had begun to shrink in the pre-pandemic phase, India had been trying to take measured steps on managing its economy both from the aspects of monetary and fiscal policies, and trying to bring the economy back on its well heeled foot. Then came the pandemic and the ensuing national lockdown, taking the national economy to an unprecedented slowdown amid the fear of ‘a long and substantial’ recession in the economy on the top of adverse consequences caused by the pandemic.

According to a Centre for Monitoring of Indian Economy (CMIE) report released in September 2020, among the many hardships that the pandemic has brought in its wake, approximately 21 million salaried jobs in the country have since been lost, causing untold misery.[14] As the pandemic continues to unfold, the rise in levels of the number of salaried jobs is likely to continue amid fears of a drying economy and the onset of recessionary pressures.   

SMEs that are a vital part of industrial production process have suffered heavily due to large-scale disruption in industrial production and economic activities. According to a survey by Local Circles, within the first eight months after the pandemic began, 78% of Indian startups and SMEs had reduced their workforces to supply chain disruptions, lockdowns and economic losses.[15] The effects of these massive job losses continue to be felt.  

Overall, the Covid-19 pandemic has brought untold pain, misery and economic distress to many millions of people and various industries throughout the country. While the impact of the pandemic continues on economy, industrial production activities and other economic activities continues to unfold, the forecast is that the economy will take longer to recover to be able to reach pre-Covid-19 levels only from the year 2022.

Economic Mitigation and Recovery

Since the disease outbreak, Indian government — like the other governments elsewhere — have struggled to put in place a stimulus package and economic recovery plan to respond to the devastating socioeconomic effects arising from the pandemic.

Indian government since the outbreak of the pandemic has taken a measured and calculated plan for economic recovery and stimulus, which has come in a piece meal manner. The government initially set aside 1% of its gross domestic product (GDP) to support informal workers and the homeless, providing direct cash transfers.

The government subsequently (in a follow on measure) appropriated approximately $50 billion to address the issue of bank liquidity and another tranche of about $26 billion to help keep small- and medium-scale enterprises to stay afloat — bringing the recovery package to 15% GDP overall.[16]

Last May, Indian Prime Minister Narendra Modi announced a large economic recovery (reforms) package pegged at $260 billion, which is aimed at strengthening country’s supply chains through public-private partnerships so as to reduce national dependence on foreign sources of essential life-saving supplies during any future pandemic. This recovery package is the largest by far in independent India’s history, accounting for 10% national GDP and 70% of India’s total budget for FY 2020-2021. India is thus among the top five nations to have set aside 10% or more of GDP toward economic recovery.[17]

In order to secure the well being of the nation’s poor and vulnerable groups, Indian government announced on June 30, 2020 a national food program for 80 million rural and urban poor going up until December 2020 costing the national exchequer approximately $12 billion. This national food program became essential in securing basic food items for the poor until the onset of the economic recovery and the arrival of agricultural produce. The “One nation, One ration” card scheme was also launched during the pandemic, providing a food ration to people across the country, irrespective of their domicile and place of work; and bringing more transparency to food distribution while potentially avoiding a large-scale mass migration.[18]

Opposition political parties, however, have been critical of the Indian government’s response to the pandemic. The criticisms range from the complaint that the Modi administration took too long to generate the economic recovery and fiscal rescue plan for both the people and struggling sectors of economy, in particular, sectors such as retail, hospitality, construction, auto and industrial manufacturing. The government, for its part, has maintained that India, given its overall financial capacity and the nature of raging pandemic, needed to target its financial resources and direct them accordingly in order to achieve maximum impact both in reviving the economy and in ensuring the well-being of the poor and SMEs — the latter being vital elements of large businesses’ supply chain and thus the key to regenerating industrial growth in the post-pandemic era.

Conclusion

Besides having begun manufacturing Covid-19 jabs, India rolled out its indigenous vaccine candidate on January 16, 2021, in what is the largest inoculation exercise in the world, aiming to some 300 million people by August 2021 without charging any cost to health workers, first responders, and those above the age of 60 years with co-morbidity. The country has so far inoculated more than 2 million priority people and is going to follow it through to vulnerable category over time up until August. Additionally, India, in a rare goodwill gesture, has supplied millions of jabs to “friendly” countries both within South Asia and beyond into Africa and Latin America

As the Indian government is also set to present its annual budget later in February, it is widely expected that it will take into consideration a full spectrum view of the economic losses, joblessness and industrial slowdown and direct its budgetary measures to safeguard the health of the economy and well being of the people by balancing monetary policy with fiscal stimulus.

It is also hoped that the locally manufactured vacancies will not only instill a sense of confidence in its people but will likely handle the virus more effectively, building its economy better — and in an equitable manner.   

 


[9] Nishtha Saluja, “Over one-third MSMEs start shutting shop as recovery amid Covid-19 looks unlikely: AIMO survey,” Economic Times, June 2, 2020, https://economictimes.indiatimes.com/small-biz/sme-sector/over-one-third-msmes-start-shutting-shop-as-recovery-amid-covid-19-looks-unlikely-aimo-survey/articleshow/76141969.cms.
 

[10] Saibal Paul, “Migrant Crisis: Can Rural India Handle and Support Its Itinerant Returnees?” Business Today, September 20, 2020, https://www.businesstoday.in/opinion/columns/migrant-workers-returning-to-urban-workplaces-can-rural-india-support-reverse-migrated-population/story/416472.html.

[11] Amarnath K Menon, “Covid-19 Fallout: How the Pandemic  Displaced Millions of Migrants,” India Today, January 11, 2021, https://www.indiatoday.in/magazine/news-makers/story/20210111-displaced-distressed-1755084-2021-01-03.
 

[13]  Pinaki Chaudhuri and Gautam I. Menon, “Explained: How many Covid deaths prevented by lockdown,” The Indian Express, June 4, 2020, https://indianexpress.com/article/explained/how-many-deaths-prevented-6441365/; and Sanjiv Miglani, “India’s coronavirus infections surpass China, but contagion slowing,” Reuters, May 16, 2020, https://in.reuters.com/article/health-coronavirus-india-idINKBN22S08F.

[14] Mahesh Viyas, “Labour force shrinks in September,” Centre for Monitoring Indian Economy, October 2, 2020, https://www.cmie.com/kommon/bin/sr.php?kall=warticle&dt=2020-10-02%2018:46:31&msec=080.

[15] “Covid-19 caused 78% MSMEs, startups in India to reduce workforce: in last 8 months: Survey,” Times of India, October 20, 2020, https://timesofindia.indiatimes.com/business/india-business/covid-19-caused-78-msmes-startups-in-india-to-reduce-workforce-in-last-8-months-survey/articleshow/78766748.cms.

[16] Annapurna Singh, “Centre announces Rs. 2.65 lakh Crores Fresh Covid 19 Stimulus Package,” The Deccan Herald, November 12, 2020, https://www.deccanherald.com/business/business-news/centre-announces-rs-265-lakh-crore-fresh-covid-19-stimulus-package-914709.html.

[17] Jeffrey Gettleman and Hari Kumar, “Modi Announces $260 Billion Coronavirus Rescue Package for India,” The New York Times, May 20, 2020, https://www.nytimes.com/2020/05/12/world/asia/virus-india-rescue-package.html.

[18] “Desk Report, One Nation, One Ration Card will be Reality Soon, Will Benefit Migrants: P M Modi,” India Today, June 30, 2020, https://www.indiatoday.in/india/story/pm-modi-speech-one-nation-one-ration-card-announcement-coronavirus-lockdown-migrant-workers-1695543-2020-06-30.

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