Economic
Highlight
New Delhi, 6 April
2020
COVID-19 Realities
NECESSITATES CARING GOVERNANCE
By Shivaji Sarkar
The world is slipping
into a crisis from the lockdown, say the World Bank and the United Nations. While
the WB warns that about 11 million people would be in severe poverty, the UN predicts
10 per cent of world GDP would be required to rejuvenate the economy.
In his call to battle
the corona pandemic, UN Secretary General Antonio Guterres says “it is the most
challenging crisis since World War II, a human crisis and attacking societies
at the core.” Indeed, the world’s industry, transport, travel, agriculture and finance
are sinking. Regrettably, major powers are more into politics rather than
addressing the critical issues. Large sections of the workers across the board
from Canada and the US to Europe and Asia are losing jobs and those in employment
are suffering heavy pay cuts. Many international airlines and companies have resorted
to large lay-off of workers.
The hospitality
industry is facing a grim situation as domestic, national and international
meets are being cancelled and the corporate resorting to expenditure cut. The
putting off of Wimbledon tennis tournament, Tokyo Olympics and many such events
are adding to the woes. It may have longer term impact as many organisations
are switching over to video meetings, including world and national leaders.
This would weigh heavily against businesses that thrived on face-to-face and
personal interaction.
India is no exception.
Manufacturing activity in March came down to a four-month low. It is at 51.8 in
the Purchasing Managers’ Index. The falling global demand is hitting exports. Significant
trouble is seen in the new export orders and future activity indices, an
indication of reducing global demand and domestic activities.
Realty is to be worst-hit
as the labourers have left the metros and headed home. They are not expected to
return soon. Plus, realty sales have been hit as inventories remain incomplete.
Online merchants are jittery as sales and cash flows dry up.
Recall, India was
least impacted by the 2007-08 sub-prime Lehman meltdown. But this time it is
one of the most severely hit. The most prominent, GST collections increased by
a mere 4 per cent amidst falling activities. Only the insurance sector remains
a beneficiary. It has once again increased premium without any justification. The
claims have also seen a fall. Sadly, the entire insurance sector is resorting
to unethical practices and the regulator unfortunately remains mum.
At the same time, State
governments in particular are in a mess. Their fiscal deficits touch Rs 55.24
lakh crore. Some like Rajasthan announced a five-day salary cut, Maharashtra 50
per cent wage cut from the top and Telangana cuts 75 per cent wages from the
Chief Minister to the lowest level citing financial crisis. West Bengal Chief Minister
Mamata Banerjee has written to the Centre for help, else the State employees would
not be paid next month’s wages.
The private sector is
not lagging behind. Airlines, taxi services have announced 25 per cent wage
cuts, many hotels either laid off or quietly asked employees to go home. Many
other sectors including small and medium businesses, facing closure of
activities and loss of production, are asking their employees to leave the jobs.
Since they are not officially on any roll, they have nothing to fall back upon.
All of this has
witnessed massive reverse exodus to the villages. Across India-- from Delhi,
Mumbai, Ahmedabad, Bhubaneswar, Jaipur, Kochi, Rajasthan, UP, MP, Odisha,
Gujarat and other places, migrant workers having lost jobs and uncertain
conditions have preferred to walk thousands of kms to reach their homes as the
lockdown closed down all modes of public transport ---trains, airlines and buses.
West Bengal workers in Kerala are reportedly said to have walked over 2400 km
to reach their destination home.
Those in Delhi, Gurugram,
Ghaziabad and Noida swarmed the highways with their family members, small
children and little belongings on foot. On the way they received brutal police
treatment almost in every State and worse some suffered chemical spray at
Bareilly, UP and other untold miseries. The country has never seen such long marches
to the villages since independence, except for a brief period after MNREGA was
enacted in 2005.
With the unprecedented
lockdown causing panic across the country, some have questioned the reverse
migration despite supposed free food being served by Delhi government. They
forget that the migrant labourers are not beggars, but self-respecting people;
many have small land holdings; many are average farmers, who lost their livelihood
and many from higher social echelon but impoverished.
Experts say it’s a
misconception that they want to live on dole and are greedy. They forsake free
meals and also do not accept gifts, writes Lt Gen AK Mishra, Vice Chancellor of
a university in Jabalpur, Madhya Pradesh. He cites an instance of someone who tried
to give some food items and biscuits to a woman with bags on her head on the
road and walking with her family to reach their home in the village, and she told
the benefactor, “Sir we have enough. Please give it to someone who needs it”.
Majority of those who
left the cities reportedly explain they don’t have income, can’t pay rent or
purchase food grain and are unable to live in hostile metros, where nobody
cares for them. According to Delhi government statistics such workers number 55
lakh or 80 crore and 8 lakh of these are women. The lockdown has brought to the
fore the abysmal conditions that over half of the country’s people live in,
begging the question are they god’s forsaken children?
Another exposure
across the nation is the failure of health care systems including of the
richest, the US or the EU. In fact, expensive medicare insurances have failed
the people there. And the lockdown in those countries are stated to be
admission of failure of an expensive system, almost all over G20, that is based
on high taxation, cess, fees, tolls, bank charges, arbitrary deductions
(particularly in the EU and US by banks). France one of the worst-hit by corona
was hit through 2019 series of violent protests against an oppressive
bankisation and hi-tax system.
Coronavirus has
exposed this economic and social malaise causing unprecedented miseries to the
people being deprived of their incomes. It calls for more caring governance
across continents. That is the concern of the UN and WB. It is easy to call for
mopping up 10 per cent of world GDP for a revival, but is the most difficult
task. The world needs to be humane, is one dominant message of coronavirus. No
economy can thrive without a touch of humanity. ---INFA
(Copyright, India
News & Feature Alliance)
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