Economy needs a more decentralised lockdown

Indian economy is headed for trouble partly because of a situation not of our making—the coronavirus pandemic—and partly because of our last six years of inappropriate economic policies.

As for the coronavirus pandemic, so far the Narendra Modi government has handled the situation well and decisively. The coronavirus casualty numbers are quite low at about 200+ deaths; and this is because the Prime Minister has constituted a team with a very capable Minister of Health & Family Welfare, Dr Harsh Vardhan as leader.

Coronavirus-caused infection rates may be understated in India, but the important figure of number of deaths is not easy to understate, since no family wants to hide the fact of death in the circumstances.

The problem for the nation is not that we cannot defeat the coronavirus, but that the already crisis-ridden economy has been shattered by the lockdown. We may thus win the coronavirus battle but be badly defeated by the war to save the economy from collapse. When coronavirus enters the body of a human, which is already sick, there is a huge uphill task to save the human.

India is the only G-20 country which is not just afflicted with an epidemic raging among its citizens, but is also debilitated by falling growth rates in output and rising unemployment. The economic system of India was already ailing for three years by the time the coronavirus arrived here in February this year. By the time the government’s lockdown policy manages to contain the coronavirus, the economy may become so emaciated that there may be a situation of mass unrest among its people due to unemployment and poverty.

We therefore first need a reality check. The economic reality of today can be assessed from the following facts:

[i] The growth rate of the economy with proper index number based GDP has declined steeply over the last three financial years, 2017-20.