Responses of Govt of India to fight against COVID: What went wrong??

There are studies around the responses by Indian Government to contain the COVID-19 pandemic. As experts mentioned, the most destructive outcomes such as, dramatic economic collapse and humanitarian catastrophe in India, did not result from the trajectory of the disease, but from the nature of the government response.[1] Government’s decision to impose lock down and curfew-like regulations confining people to their homes, preventing most economic activity and prohibiting movements delayed the virus transmission but did not control it. India was caught in the worst of both outcomes: inability to control the disease, combined with immense economic losses and massive human tragedies resulting from the lockdown and associated collapse of employment and livelihoods. 

The disease continued to spread on one hand and fate of the people in informal sectors continued to worsen with no livelihood for at least 2 months since lock down in 2020. The worst affected were migrant workers who got to expose to virus while returning back to their places of origin as well as had no choice but to fall back on existing savings or borrowing for survivals for losing jobs. The slight revival in employment in May'2020, as lockdown restrictions were eased somewhat, was not matched by equivalent wage incomes, as wages and self-employed incomes remained much lower than before.[2] Studies mentioned about few unrealistic measures that failed to control the pandemic as well as to address the excessive economic distress.

Unprepared decision on lock down and Haphazard travel restrictions

Stringent, unprepared and abrupt decision on lock down as containment strategy not suited to Indian context. Around half of all workers are self-employed, usually in informal sectors. These workers were sharply affected by the lockdown, which deprived them of paid employment without warning. “Stay at home” policy is unreasonable for a country like India where at least quarter of villages live in extremely crowded and congested conditions (Prof. Jayati Ghosh, 2020, Journal of Industrial and Business Economics). Frequent washing of hands is an unrealistic idea with limited access to clean water.

Also centralization of power with too much of top-down controls and lack of consultations with state governments, for example, sudden lock down announcement led to worst consequences. Furthermore, State governments were made responsible for essential public health measures and dealing with economic effects of the lockdown, but they were completely strapped for cash. The central government provided almost nothing by way of additional resources and imposed many conditions on their ability to borrow, thereby limiting their ability to spend and effectiveness in dealing with the disease and the economic distress. (Prof. Jayati Ghosh, 2020, Journal of Industrial and Business Economics).

The government’s lax approach to international air passengers, at a time when they were practically the only source of infections of COVID-19 in the country, was in marked contrast to its response to the domestic populace. Especially so, with the working poor, who were left stranded by the millions, when the Centre suspended all domestic public transport without notice on March 24 ahead of the 3-week national lockdown. Many were stranded literally thousands of miles from home, and the shutdown triggered a mass exodus by foot, taking a huge toll in lives and livelihoods.

Miniscule relief package for the hardest hit sections of population

Studies[3] say that misplaced timing and delayed responses in several critical areas, especially for migrants pushing them towards destitution and hunger. There has been announcement from central and different state governments under existing pro-poor government schemes about cash transfers and free ration distributions for migrants and vulnerable families. These included,

-         Ex-gratia amount of INR 500 per month for women in Jan dhan account for 3 months

-         Free LPG cylinders for BPL families for 3 months

-         Wage increase by Rs.2000 per worker under MNREGA

-         One time ex-gratia amount of INR 1,000 to senior citizens, widows, disabled

-         Distribution of 5 kg of wheat and rice for free in addition to the current 5 kg allocation for the next 3 months

-         Direction to state governments to use welfare fund for building and construction workers.

-         Rs 1.7 lakh crore economic relief package under the ‘Garib Kalyan Yojana’ for the poor suffering from unprecedented measure.

However, the stimulus and relief package for poor and marginalised families, the hardest hit by the pandemic, despite inflated announcement by the Government on official relief packages, had been grossly inadequate. Total additional public spending promised by all the relief measures announced by the end of May amounted to only around 1% of GDP (CBGA, 2020).

SWAN Report 2020, a surveys of migrant workers after 1 month of lockdown found that most of them (96%) had not received food rations or cash relief from the government, while around 90% had not been paid for the period by their employers either. 

According to the research wing of the State Bank of India, Of the Rs 2 lakh crore of direct fiscal impact, only Rs 76,500 crore (including free ration) involved direct money transfer to the people, which constitutes a paltry 0.38% of the GDP.[4]

Additional ration for three months, cash transfer of Rs.500 in Jan Dhan account or ex-gratia amount of Rs.1000 to widows and disabled seem to be inadequate which were all announced only till June, whereas the effect of pandemic has been long term and is still continuing.

For the 14 crore migrant workers who were rendered homeless, without incomes, and without food at one stroke, and hence poured out in vast numbers onto the streets to go back to the only refuge they knew, namely their village homes, the announcement of the “rescue package” of Rs.1.7 lakh crore stands grossly inadequate. Of this, the fresh assistance in the Union Budget, amounted only to Rs.92,000 crore or less than 0.5% of the country’s GDP, which is far lower than of every other major country in the world.[5]

Inadequate stimulus package for MSME and Farmers

Over the 40-day lockdown period, MSMEs and industries otherwise permitted to operate had been constrained due to regulatory hurdles. Each continuous process, essential service manufacturer and other ancillaries and intermediaries were unable to break the regulatory lock jam with respect to receiving approvals from district administrations. There were a lot of instances where approvals for starting operations for a continuous process or their raw material supplier or their intermediary has been pending for over 20-30 days. All the regulatory hurdles and on-ground implementation issues were most adversely affecting the MSME sector in India.[6] A major portion of the Atma Nirbhar Bharat Abhiyan (ABY) package totalling a financial support of Rs.20.97 lakh crores announced by the Government of India focuses on providing collateral few loans, credit guarantees etc. to farmers and MSME. This include,

-         Upfront income support of Rs.2000 to the farmers through PM-KISAN scheme

-         Announcing Rs.3 Lakh crore collateral free loan with 100% credit guarantee

However, studies[7] mention that for the farmers and Micro, Small, Medium Enterprises (MSME) sector, additional loans have been promised liberally but very little has been done to compensate their loss during the lockdown or to ease their debt burden. It is surprising that while the government has announced Rs. 3 lakh crores for providing credit, it has not yet paid MSMEs the amount owed to them amounting to as much as Rs. 5 lakh crores.[8]

Insufficient investment in health system, shortage of emergency supplies and delays in domestic production of testing kits 

Research reports talk about the inadequate preparation of health systems, facilities and personnel during lock down period keeping the facilities like hospital beds, ventilators, etc. well below the need on one hand and ignoring treatment focus for people with long term diseases like TB, Cancer, Kidney ailment, Heart ailments etc. on the other hand. Insufficient investment in Health System and inappropriate distribution of funds to the states from center was another hindrance to cope with the pandemic. According to a study (CBGA, 2020), less than 0.04% of GDP were made available for immediate public health expenditure and less than half of that was distributed among states, in a rather arbitrary manner.

At the wake of pandemic Personal Protective Equipment (PPEs), especially masks and coveralls, are essential for the protection of healthcare workers, and are mandatory under WHO guidelines for Covid-19 treatment. The Centre had banned the export of PPEs on January 31, but allowed the export of raw materials for PPEs. However, according to Scroll.in investigation, the government had not placed any substantial orders for PPEs in the one and a half months since its ban on exports. Nor did it issue any specifications on the design, quality and testing of Covid-19 safety gear for manufacturers to start production. According to one estimate[9], in place of the 38 million masks and 6.2 million coveralls that were required in India, only 9.1 million masks and 8,00,000 coveralls were available. The story was not very different with mechanical ventilators. According to one estimate[10], India may require up to 1 million ventilators to deal with COVID-19, and has recently placed an order for 49,000 units.

Several independent experts have said that India was not testing enough for COVID-19 cases, which was because of lack of kits. The Centre’s attempts to start domestic production of testing kits but approvals process itself was started as late as 23 March, at a time when India had a total of 471 confirmed COVID-19 cases. Adding to this, ICMR guidelines on domestic testing kits issued on March 23, included an inexplicable condition that required domestic testing kits to be approved by the U.S. Food and Drug Administration. The stipulation added further confusion to an already chaotic situation and further delay in production.[11]

Insufficient stimulus package for economic revival

The announcement of Rs. 20 lakh crore under Atmanirbhar Bharat Rozgar Yojana economic package looked inflated in the beginning with the hope that the package would improve the loss in economy. However, as analysed, the actual cash outgo from Centre's offers for this stimulus is only 0.75% to 1.5% of GDP, which is a miniscule amount when compared to other countries.[12] According to the Quarterly Review of the Economy by National Council of Applied Economic Research (NCAER)[13], the economic stimulus package of Rs.20 lakh crore would result in negative GDP growth of -12.5% for the whole year 2020-21, the least possible policy scenario to regain a positive GDP growth would be to ensure additional spending of at least 3% of GDP over budgeted level for 2020-21. This would result in positive GDP growth of 1.2%, with lower inflation and smaller fiscal deficit. In short, the present economic stimulus package announced by the Central government focused more on long term policy measures, rather than immediately reviving the economy or addressing the immediate needs of poor and middle class sections.

Caste, class and gender bias of policy responses[14]

Class orientation in policy measures such as, denial of livelihood for informal workers without alternative social protection, refusals to release foodgrains for hungry, control mobility of migrants, detaining or humiliating the migrants who tried to walk thousands of kilometre to their homes, had been criticised by many of the economists. According to experts, the typically better-off persons throughout the period of lockdown were the Indian citizens stranded abroad as the Government arrange incoming evacuation flights were (often at public expense), whereas stranded workers in India got little or no assistance. When some trains for internal migrants were finally arranged, impoverished workers were made to pay full fares, and conditions on these trains were often appalling, with prolonged and delayed journeys in intense heat during which food and water were not provided, adding to distress and ill-health. On the other hand, the still pervasive caste system in India unfolded once again with discrimination against the front line workers in the fight against COVID. Most of the front line workers especially basic health workers and sanitation workers, come from lower castes and tend to be women. They are poorly remunerated, often not even receiving minimum wages. During the pandemic, they have typically had to work without adequate protection (with a disproportionate number getting infected) faced social discrimination and physical threats, and in many cases have not even received their full pay.

[1] A critique of the Indian government’s response to the COVID-19 pandemic; Jayati Ghosh, J Ind Bus Econ. 2020 Jul 11 : 1–12

[2] ibid

[3] A critique of the Indian government’s response to the COVID-19 pandemic; Jayati Ghosh, 2020, Journal of Industrial and Business Economics

[4] “Package of numbers, not relief”; T M Thomas Isaac, MAY 19 202

(web: https://www.deccanherald.com/opinion/main-article/package-of-numbers-not-relief-839620.html)

[5] Patnaik, Prabhat (2020): "The Mendacity of Modi Govt's 'Rescue Package'", Newsclick, 23 May.

Web: https://www.newsclick.in/Modi-GOVT-Rescue-Package-for-COVID-Sufficient

[6] Singh Rudresh; May 05, 2020; “MSMEs in essential operations are locked out; implementation paralysis hurting small businesses”, Web: https://www.financialexpress.com/industry/sme/cafe-sme/msme-eodb-lack-of-coordination-between-govt-and-on-ground-authorities-impacting-msmes/1948854/)

[7] “Package of numbers, not relief”; T M Thomas Isaac, MAY 19 202

(web: https://www.deccanherald.com/opinion/main-article/package-of-numbers-not-relief-839620.html)

[8] Centre for Budget Governance and Accountability (CBGA). (2020). Numbers on the Edge: Assessing

India’s Fiscal Response to Covid-19. New Delhi: CBGA.

[9] https://www.firstpost.com/health/coronavirus-outbreak-only-9-1-million-of-38-million-masks-needed-to-fight-covid-19-in-india-available-says-invest-india-agency-8202171.html

[10] https://www.indiatoday.in/coronavirus-outbreak/story/covid-19-shortage-of-ventilators-iit-team-pitches-bag-valve-mask-as-alternative-1661659-2020-03-31

[11] “Five COVID-19 Policy Mistakes India Could Have Done Without” (web: https://thewire.in/health/five-covid-19-policy-mistakes-india-could-have-done-without)

[12] Mudit Kapoor | Mohsin Shaikh; May 22, 2020 ; Infographic: How little Govt will spend of Rs 21 lakh cr stimulus package

[13] NCAER, 2020; Quarterly Review of the Economy, 2020:1Q in Coronavirus times;

(Web: https://www.ncaer.org/uploads/photo-gallery/ files/ 1589650398NCAER%20QRE%20Presentation%20May%2015%202020.pdf)

[14] A critique of the Indian government’s response to the COVID-19 pandemic; Jayati Ghosh, J Ind Bus Econ. 2020 Jul 11 : 1–12