Waiting for Godot

Prime Minister Narendra Modi’s March 24 announcement of a nationwide three-week complete lockdown to keep coronavirus at bay met with much enthusiasm and near-total compliance.  Seven weeks on, India’s mood about its consequences is far more sombre. The desperation of the walking migrants may not be shared by all, but a sense of foreboding about all our prospects prevails at large.

Clearly, the daily count of new infections and deaths has much to do with this. Experts say that the curve is not yet flattening and the peak may occur as late as mid-August.  If that were to happen and the present rate of cases doubling every 10 days were to persist, we are looking at over 15 million cases in three months.  This writer sincerely hopes that this turns out to be a false alarm, but even a third of it, five million, would be twice as large as the number affected by our deadliest scourge, tuberculosis.  No wonder experts and leaders are counselling us that we must learn to live with the wretched virus.
The acknowledged purpose of a lockdown is buying time for significant actions to slow down the spread of the infection and mitigate its after-effects.  That has not quite happened in India.  Take the widely-publicised streams of migrant workers heading home in the direst of fashions.  These surfaced within days, by the end of March.  But apart from largely unconvincing appeals by leaders to those wanting to go home to stay where they were, nothing much happened until last week, when special trains began carrying them home.  That too was not without confusion as to who pays the fare.  All this could well have been sorted out within the first two weeks of the lockdown.  By now, we could have had over a month of more than 200 such trains daily.  That would have immensely boosted the confidence of the affected in the government’s ability to deal with their most pressing concern effectively and in time.

Or consider the tax-gouging by state governments on the only two commodities left for them to exploit, alcohol and fuel.  Had the central government done something more than just providing them soothing words, the extortionate rise in taxes and pell-mell opening of liquor shops with attendant unruly crowds could have been avoided.

But government dithering has affected nothing more grievously than providing succour to the macro-economy.  There is no gainsaying the need for governments to extend sizeable relief to all sectors of their national economies, especially the most vulnerable ones, which would suffer severe body blows due to lockdowns.  Even the American Republicans and Democrats, otherwise forever at each others’ throats, quickly agreed on a $3 trillion stimulus to a $22-trillion economy and got their always-in-denial President Donald Trump to endorse it.  But apart from an initial announcement of a Rs 1.7 trillion boost, half of which was just a regrouping of already budgeted expenditure, or a measly 0.4 per cent of gross domestic product (GDP) as fresh infusion, India has done little, despite the Reserve Bank doing some heavy lifting on the credit front.  This is in the face of Neelkanth Mishra’s very credible guesstimate of a Rs 10 trillion (5 per cent of GDP) hit to the economy in these pages (“Who Should Bear The Losses?” Business Standard, May 6).

It is not as if there is any dearth of advice.  Both Raghuram Rajan and Arvind Subramanian, the two immediately past chief economic advisers to the government, have suggested their own prescriptions in popular and economic press.  If their views are anathema to the present dispensation, it could have listened to Arvind Panagariya, the former deputy chairman of the NITI Aayog.  Or consider specific proposals by such non-ideologues as Rajendra Chitale and Mahesh Vyas (The Times of India, April 25).  Both these make innovative use of the Goods and Services Tax mechanism for gradual recoupment and not require a large monetisation of the likely deficit.

But all we get are frequent headlines of how the government at the highest level is seized of 
the matter and some optics. Or homilies about there being no free lunches.  Even the stock market punters are no longer swayed by these pronouncements.  Monday’s much-anticipated video conference between the prime minister and the state chief ministers also produced no announcement of a stimulus.

Why is the government so chary about announcing a worthwhile boost to the economy? One reason could be that it is worried about the effect this would have on the budgetary deficit and the sovereign rating.  But that concern is overdone: Most forecasts now suggest zero or slightly negative Indian economic growth in the current financial year, which would have a more serious impact on foreign investors’ perceptions than a rating downgrade.  The other and very real possibility is that the government now finds itself in a kind of lockdown: Its predicament is to reverse its earlier pronouncements of the economy being in fine shape, despite what it claimed to be minor hiccups.

Whatever be the situation, private and corporate citizens of India waiting for the government to act risk turning into Samuel Beckett’s Vladimir and Estragon waiting for Godot, who never shows up.
The writer is an economist



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