Experts urge financial protection for poorest and most vulnerable
India must focus on protecting its poorest and most vulnerable citizens from the economic fallout resulting from the pandemic, according to experts.
Abhirup Sarkar, an economist, said those worst affected are small farmers, daily wage earners and contract laborers. “It is the duty of the government to make sure they stay afloat, not die from starvation,” he added.
The authorities should immediately give money to those who have become jobless as a result of the national lockdown, said Sarkar, who teaches at the Indian Statistical Institute.
“Many of these people are migrant laborers, and it is highly unlikely that they will go back to work anytime soon,” he said.
“The economic damage will be serious ... and the recovery will be long and challenging. Many people have already lost their jobs due to the lockdown, and they are finding it increasingly difficult to survive. The longer the lockdown, the harder it will be for them to sustain themselves,” he said, adding that the poor urgently need cash.
The lockdown includes relief measures for those worst hit by the outbreak. Some 800 million people will receive free food and cooking gas in addition to cash through direct transfer for three months.
Sarkar said if the slowdown experienced before the outbreak was the result of poor demand, supply-side pain would likely be experienced when the pandemic ends.
“With massive dislocation having taken place, it will not be easy to get employees — both skilled and semi-skilled — back to work. That is bound to affect production,” he said.
The World Bank has called on governments in South Asia, including the authorities in India, to provide substantial financial support over the next few months to help protect the poor and vulnerable, support businesses and bolster economic recovery.
Sanjeev Sanyal, principal economic adviser to the Indian government, said that while “unwinding” of the lockdown has begun, India has slipped into a downturn that could last for years.
Credit ratings agency Moody’s has cut its projection for India’s GDP growth this year from 5.3 percent to 2.5 percent. Domestic ratings agency CRISIL has warned of further downside risks if the pandemic is not brought under control by next month or if it spreads rapidly in India, affecting consumption and investment.
According to CRISIL, the threat from the pandemic is bigger than that posed by the global financial crisis of 2008, as it “not only slams the brakes on economic activity and jeopardizes financial stability, but also brings with it enormous human suffering not seen in decades”.
Meanwhile, the World Bank, in its South Asia Economic Focus, has predicted a sharp economic slump in each of the region’s eight countries, including India.
The economic damage will be serious ... and the recovery will be long and challenging.” Abhirup Sarkar, an economist who teaches at the Indian Statistical Institute