Centre raises hopes of free COVID-19 vaccine, but benevolence can't be at the cost of the economy

This article first appeared in the Firstpost. COVID-19 has assaulted the health of people and economies. The impact on the economy has led to further stress on people’s livelihoods. This unprecedented threat to public health has not been constrained by measures taken by national and state governments. All humankind is waiting with bated breath for a COVID-19 vaccine that can set us on a course to normalcy. The human and economic cost of COVID-19 has been immense and governments are stepping up to expedite vaccine availability.Given the vaccine’s huge impact on public health, it is reasonable to expect that the government makes it available free for all. The cost of undertaking this exercise would depend on a variety of factors – the cost of manufacturing, the cost of supply chain, and the cost of administration of the vaccine. For example, nucleic acid-based vaccines have to be stored at sub-zero temperatures and are costly to make and transport. (Read more) 

India’s local governments must do far better in raising revenues

Driving into Bengaluru’s city centre a couple of weeks ago after several months of working from home, I was pleasantly surprised to see well-demarcated parking spaces, electronic signs, and payment kiosks along MG Road. Brihat Bengaluru Mahanagara Palike (BBMP), our municipal corporation, had finally implemented a modern paid parking system, albeit only along a few major roads in the central business district. This being Bengaluru (the original home of the “we have an app for that" meme), the system allows you to discover available parking lots on your smartphone and pay the fees online.

The BBMP expects this system, implemented as a public-private partnership, to earn an annual income of ₹31.56 crores for the next ten years. That’s not a lot, but not bad either, considering that it was earning nothing from the public asset in the past. A few years ago, my colleagues at Takshashila estimated that the city could earn over ₹500 crores a year, or around 5% of BBMP’s approximate annual budget if it were to implement paid parking on just one side of a mere 3% of Bengaluru’s roads. Clearly, parking fees alone have the potential to be a significant part of the corporation’s budget. Indeed, there is a moral case for the government to implement paid parking—free parking is effectively an unthinking transfer of public wealth to an undeserving rich person. A car owner gets ₹30 per hour in implicit subsidy for every hour he parks on the public road, for no good reason. That’s not counting the economic costs of congestion and pollution arising from the overuse of an underpriced good. Contrary to popular belief, India’s municipal corporations are doing a public disservice by permitting free parking.Read More

Lockdown Is Choking The Economy

When the national lockdown was imposed, with four hours notice, the country had less than 200 positive cases and a two percent fatality rate. The world marvelled at India’s determination in imposing such a strict control on a billion people.  Two months later, the number of virus positive cases is nearing 1.5 lakh and the fatality rate has inched up to 3 percent. Now the world is not so sure whether the strict lockdown has achieved what it set out to do.The stated goal was to “flatten the curve”, that is decrease the upward slope of the spread of the virus. Since the virus mainly spreads from people to people contact, the method was to isolate people in their own homes, observe social distancing, restrict movement.Three fourth of the economy was shut down. It was as if collectively the nation was holding its breath. But after holding our breath for two months, we are feeling breathless, the economy is choking, having run out of its oxygen. The four-hour notice given on March 24, also meant that people did not have any time to plan their own lockdown. Many families suddenly found themselves separated, since one or two members were stuck in a different city due to office duty.Read more

Get India back at work to secure the economy and employment

As we near the end of an extended national lockdown, our policy discourse must broaden from containing the outbreak to addressing the three ‘R’s for the economy as well: of relief, revival and reconstruction. While the pandemic will haunt us for a few years, it is also true that complete lockdowns will harm Indian society as much—if not more—than the disease.

Unlike rich countries, India’s government simply does not have the resources to pay people to stay at home. Most businesses are staring at insolvency after having to keep and pay employees over the past four weeks. Even if they manage to stay afloat, their distress will compound our unemployment crisis. According to Mahesh Vyas of the Centre for Monitoring Indian Economy, 140 million people, or 14% of India’s working age population, have lost their jobs during the lockdown. Both urban and rural India have been hit hard.

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To open or not to open India up: a dilemma that need not be one

As India decides what next after the 21-day national lockdown ends on 14 April, opinions are divided among those who want a phased lifting and those who want to extend it. This reflects underlying differences between those who believe it is worth taking calculated risks to forestall widespread suffering on account of lost livelihoods, and those who are concerned taking such risks could cause the pandemic to spiral out of control.

Bold as it was, Prime Minister Narendra Modi’s decision to impose a lockdown on 24 March was easier compared to what he has on his plate now. At that time, the consequences of the pandemic were clear, whereas those of the lockdown both unknown and in the future. It is almost the opposite now, and the moral dilemma appears far more acute. The prime minister has to weigh the real suffering of hundreds of millions of people caught in the lockdown against the millions who might catch the disease if the lockdown is lifted and the pandemic spreads. It’s not an easy decision, but there are ways to make it less difficult.Read more

We must avert an economic disaster due to Covid-19

Indian economy will suffer due to COVID-19, but govt can ease the pain for individuals and firms with decisive and meaningful action nowFor businesses, the union government should think of delaying GST payments, tax credits, and any other policy that could support employers to keep their staff on board.  As on March 24, the Finance Minister, Nirmala Sitharaman has announced a few measures to ease the compliance and regulatory burden for businesses: increasing the threshold of default that triggers the insolvency and bankruptcy proceedings from 1 lakh to 1 crore, easing some of the rules for corporate affairs, and extending extending the deadline to pay excise and customs duty and GST. Government should ensure that the flow of critical supplies and services are uninterrupted, including food, healthcare, security, groceries and other provisions, electricity, telecom, ATM and banking.Most importantly, we need to think about how to protect the unorganised and informal workforce. While the salaried class, small as it may be, can afford to work from home and be assured of payments at the end of the month, the daily wage earner does not have the same luxury. A limited form of targeted Basic Income (not universal) using the JAM (Jan Dhan-Aadhaar-Mobile) trinity could be used to ensure sustenance. The union government can use the unexpected bonanza from the lowering of oil prices to fund some of these programmes.It is important, however, that any policy made for these emergency purposes come with sunset clauses. If not, the extraordinary measures to combat the disease and its impact will linger on far after the disease has faded from human memory.Read more here

US investors concerned over India’s economic slowdown, social unrest and Modi’s disinterest

Even if we ignore the fact that the Indian economy is in a severe slowdown, we should not forget even for a moment that India’s per capita GDP is around $2000, it needs to create around 2 crore jobs every year, and needs every little point of economic growth that it can get.So, in terms of the level of income, India is in the same league as Congo, East Timor, Nicaragua, and Nigeria. Two of India’s subcontinental neighbours, the Maldives and Sri Lanka, are far ahead of us. At around $10,000, the average income in China is 400 per cent higher than India’s. Given our tax/GDP ratios, the Indian government’s combined expenditure on everything — including health, education, defence, rural development, and social welfare — is a paltry $300 per year.Read more

Forget Job Creation, India is LOSING Jobs

This is the eighth edition of The Jobscape, our weekly round-up of news and opinion on the state of employment and job creation in India. In this edition, we look at lost jobs, the new reservations, sexism, and much more.Read more