Active Stocks
Mon Dec 04 2023 15:47:26
  1. Power Grid Corporation Of India share price
  2. 212.9 1.21%
  1. Reliance Industries share price
  2. 2,421 1.15%
  1. State Bank Of India share price
  2. 594.65 3.99%
  1. HDFC Bank share price
  2. 1,609.05 3.44%
  1. Tata Steel share price
  2. 130.95 0.77%
Business News/ Opinion / Views/  Opinion | What could see India through its covid crisis
Back Back

Opinion | What could see India through its covid crisis

New Delhi needs to optimize expenditure, given its limited resources, and use the ingenuity ingrained in our people to find innovative solutions

Photo: PTIPremium
Photo: PTI

Many commentators, including us, have argued that supporting the Indian lockdown response to covid-19 requires a large increase in fiscal stimulus. Central and state governments will need to incur huge expenditures for providing swift, digitally-enabled financial support to the unemployed, poor, daily-wage earners, migrant labor and non-salaried middle-class workers, who would otherwise be forced to step out of their houses.

However, it is increasingly clear that while a lockdown and massive fiscal support measures are emerging as the standard playbook for most countries, these options cannot be identically implemented in India. Put starkly, there are significant financial and real constraints on our ability to sustain a prolonged lockdown and to spend our way out of this crisis.

On 9 April, the government sanctioned 15,000 crore towards the ‘India covid-19 Emergency Response and Health System Preparedness Package.’ Put in context, this single announcement is 0.5% of the entire budgetary allocation for 2019-2020. The lockdown is also straining critical supply chains—food shortages have already been reported, and there are inevitable disruptions to both rabi harvests and kharif sowing timetables given the timing of the shock.

Moreover, India faces this crisis in the backdrop of an already deteriorating fiscal position. We entered the crisis with a fiscal deficit of 5.1% of gross domestic product (GDP), a total of 10.36 trillion. Even before the covid-19 pandemic hit, the government hadn’t shared a clear path toward debt stabilization when the fiscal deficit target was increased to 3.8% of GDP. Unbridled expenditure could lead to a rating downgrade as in the recent case of South Africa. And retaining financial headroom is invaluable as insurance against a second epidemic wave, even assuming that the effects of the initial lockdown are favourable in controlling the current caseload.

Constrained optimization is therefore the only way open to the nation. This means that any crisis-response expenditure must be efficiently implemented. It also means that re-opening strategically important sectors must be a critical component of a lockdown review—otherwise we risk failures of supply chains, and the possibility of widespread and long-lasting misery. And finally, the Centre and states must work together, demonstrating the benefits of our federal structure at this crucial time.

While this is clearly a second-best approach, we know that India excels at constrained optimization. We spent roughly $75 million on the Mangalyaan Mission to Mars, a miracle on a shoestring budget. And in epidemiology, India has done exemplary work in dealing with infectious diseases using limited resources. In 2016, India completed five years of being a “polio-free nation", and we are on the way to eliminating malaria by 2030 as cases have consistently declined from 2.08 million in 2001 to about 4 lakhs in 2018. As these cases show, we have successfully applied "jugaad" (an ingenious fix) to tough problems of engineering, medical science, manufacturing, and telecommunications—a much-needed skill to help the country in framing a constrained-optimal response to the scourge of covid-19.

Part of the answer lies in a hybrid digital-human approach. Some encouraging steps have already been taken, such as the model implemented in Bhilwara, which relies on symptom-based evaluation to narrow down those that need assistance, frequent checking of those with symptoms, and geographic quarantine. Another is the rollout of the Aarogya Setu app to leverage the relatively high rate of digital penetration, especially in urban areas. This tracking app dedicated to covid-19 that has been released by the central government warns users if they have crossed paths with a positive patient. The app also has an assessment for individuals to check their disease status and a helpline number available in multiple languages across the country—and had 8 million-plus downloads in the first 72 hours after its launch.

We also note in this context that India has close to one million ASHA (Accredited Social Health Activist) workers located in every one of the 250,000 villages across the country. Each of these workers is armed with a mobile phone, basic knowledge of a pathology of interest, and the means to communicate with the local villagers as well as send data back to the ministry of health and family welfare. This network can be leveraged to conduct last mile contact-tracing, provide oral medication for prophylaxis, and transmit data back into a tracking software for public health monitors. The network can also be leveraged to expand the Bhilwara model to other parts of the country.

In many countries, young and healthy volunteers have selflessly come forward to help. The government’s volunteer platform, Self4Society, already has 1,17,998 individuals and 4,977 organizations registered, even when it has only just begun inviting volunteers for communicating awareness, manning helplines and producing personal protective equipment (PPE), masks and sanitizers, in addition to helping with medical and administrative services. This network, in combination with representatives of the private sector, civil society organizations, academic bodies, independent disease experts and others can be leveraged further—many have contributed significantly during the polio eradication campaign—including in helping with services such as sourcing and distribution of food to vulnerable groups to alleviate supply-chain disruptions. It goes without saying that PPE for those on the front lines is critical to ensure that well-meaning help does not become an unintended vector of transmission.

Our message is that in the face of this crisis and given the straitened circumstances, efficient implementation is the need of the hour. Jugaad cannot be underestimated as part of the response—the country has always used its ingenuity in times of trouble, and it must do so again now.

Tarun Ramadorai and Marcus Ranney are, respectively, professor of financial economics at Imperial College Business School and a business professional in health and technology

Milestone Alert!
Livemint tops charts as the fastest growing news website in the world 🌏 Click here to know more.

Catch all the Elections News, Business News, Market News, Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
More Less
Updated: 15 Apr 2020, 11:03 PM IST
Next Story footLogo
Recommended For You
Switch to the Mint app for fast and personalized news - Get App