To restart, revise national strategy
the home ministry took to making decisions on the minutiae of economic activity in states and then issuing follow-up clarifications in response, leaving in its wake a confused and bewildered public and local bureaucracy. With partial economic activity currently planned in red and orange zones, the need for coordination to maintain supply chains and negotiate the process of opening state borders will increase. DMA is the wrong institutional framework. It must give way to a framework that privileges coordination over centralisation.
Coordination failures apart, the Centre’s silence on the nature of fiscal support to states (despite a near 90% fall in revenue in some states and repeated requests from chief ministers for central government action) underscores a second major fault line in fiscal federal relations — the absence of an institutional framework to negotiate Centre-state relations. The inter-state council, as this column has repeatedly argued, needs to be revived urgently.
Third, reset communication. The lockdown has been managed through a plethora of over 3,000 orders laced in bureaucratese, commanding citizens and bureaucrats alike, threatening them with penal action, but never offering a rationale for decisionmaking. Orders can coerce citizens into complying with State lockdown rules but not to open up. Firms and workers face an uncertain future, and to make rational choices, they need confidence. This will come from an altogether different type of communication — one that replaces orders with a credible road map for economic revival. The Centre’s failure to offer this road map seven weeks into the lockdown is the biggest hurdle to recovery.
Writing in these pages days after the first lockdown was announced, I had argued that the lockdown would put the State through a severe test. Seven weeks later, rather than coming out on top, the lockdown has exposed critical fault lines in the State, laying bare serious gaps in its already weakened capacity. The challenge of exiting the lockdown, will require the State to reset its response frameworks in ways that credibly navigate these fault lines to build trust and confidence in people and markets. This is a tall ask for a State that has so far failed to rise to the challenge. But if we fail to press the reset button now, the consequences will be disastrous.