Give our recovery a fair chance: Let us avoid another lockdown4 min read . Updated: 16 Nov 2020, 08:49 PM IST
Covid numbers might be overstated and the economic cost of new curbs will outweigh their benefits
An extraordinary year is inevitably winding to a close. The unprecedented events that unfolded in 2020, however, will reverberate for years to come. In India, recent news headlines have been more positive than negative. The government announced a third stimulus package featuring several welcome elements. Targeted assistance is to be provided to several sectors, including an extension to them of the Emergency Credit Guarantee Scheme announced in May. Its size, at ₹3.2 trillion, was more than adequate to be extended to larger enterprises than those originally deemed eligible for additional loans under this scheme. This column had made that point when the scheme was announced as part of the first Atmanirbhar Bharat package. Construction, a sector with a significant economic and employment multiplier, has come in for special attention.
When I see the fiscal stimulus announcements coming in phases, I am reminded of what Robert Rubin said in the 1990s. He was the US Treasury Secretary under president Bill Clinton. Talking of foreign exchange intervention, he said that it was more effective to intervene when the market had already begun to move in the direction that authorities would prefer. In a similar vein, fiscal support measures are likely to prove more effective after the economy has begun to hum a bit louder. This is sensible and smart policymaking.
Whether it is goods and services tax collections, purchasing managers’ indices, or other indicators, there is reasonable evidence that India’s economy has put its summer funk behind it. As far as this columnist can recall, Moody’s Investor Services has become the first to revise (for the better) India’s real gross domestic product (GDP) growth forecast for 2020-21. It is now predicting a contraction of 8.9%, better than its previous projection of minus 9.6%. It also raised its growth forecast for 2021-22 from 8.1% to 8.6%. Goldman Sachs has upgraded its call on the Indian stock market to “overweight" from “neutral". What if things begin to slide again? In other words, can things go wrong?
The short answer to that question is yes, if we are not watchful. Many countries in Europe have re-instituted lockdowns of different intensities with varying lengths. There is allegedly a second wave of infections. I use the word “allegedly" because both covid cases and covid-caused deaths have been substantially overstated around the world. Recently, The New York Times published a detailed article (‘Your Coronavirus Test Is Positive. Maybe It Shouldn’t Be,’ 29 August 2020) on how the “cycle count" in the polymerase chain reaction (PCR) test can be so high as to catch any and all the virus debris in the body and pronounce a sick person “covid positive". In an article evocatively titled, ‘Lies, Damned Lies and Health Statistics’, Dr. Michael Yeadon, former chief scientific officer of Pfizer Inc., suggests that up to 80% of the cases identified as positive by the PCR test could be false. In other words, we may have experienced a PCR-test pandemic rather than a covid outbreak. This is salient at the moment, as BusinessLine reports that the government is ramping up tests in Delhi as a “third wave" of infections washes ashore.
In April, the Centre for Disease Control in the US had announced changes to its methodology for logging deaths, updating the procedure for recording deaths from infectious diseases in vogue for more than 17 years. That may have resulted in a higher death count attributed to covid in America, shaping the discourse on the US government’s handling of the pandemic over the months that led up to the presidential election and beyond. In the UK, an article published by the Centre for Evidence-Based Medicine at Oxford University in July 2020 showed that anyone who tested covid positive but subsequently died at a later date of any cause would be included in Public Health England’s covid death figures. So, it seems a wave can be engineered even if there is no sea of deaths.
In September 2019, the Centre for Health Security at Johns Hopkins University published a report Preparedness for a High-Impact Respiratory Pathogen Pandemic in which it cautioned against the indiscriminate and prolonged use of non-pharmaceutical interventions, such as lockdowns, quarantines and social distancing. It wanted governments to set the bar high for recourse to such interventions and exhorted experts to appraise governments of the costs and benefits of such measures and also of their second and third order effects on mental health, other illnesses and societies in general.
Quite why Western nations did the opposite of what was recommended in that report is not for this column to speculate upon at this stage. But, it is important that India avoids locking its economy down again, partially or fully, if its economic recovery is to sustain. If the usual suspects re-emerge from their hibernation of the last few months, to argue for another lockdown in India, that would be a sign that such advice is badly motivated. Until 2020, no country had locked itself down to cope with a pandemic. During the Hong Kong flu of 1968, which killed over a million people, not even a newspaper kiosk was shut down. Think about it.
These are the author’s personal views.
V. Anantha Nageswaran is a member of the Economic Advisory Council to the Prime Minister.