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Coronavirus Outbreak in India: Is the Country Prepared for the Economic Impact of a 21-Day Nationwide Lock-down?

(STL.News) An eerie quiet has descended over Mumbai, New Delhi, and all other India’s cities and towns.  The country’s usually bustling streets are now quiet. All delivery drivers must wear face masks and gloves.  And even the nation’s unrelenting construction has now come to a halt.  This is all part of India’s unprecedented 21-day nationwide lock-down to stop the COVID-19 Pandemic.

India is the second-populous country in the world, and its economy ranks 5th, with trade ties connections worldwide.  Despite its size, the country of 1.3 billion people seems to have avoided the full hit of the COVID-19 Pandemic.  To date, the country has only 987 confirmed cases of COVID-19 and 25 deaths.  By contrast, South Korea’s population is about 3.8% of India’s population and has more than 9,000 confirmed cases of coronavirus.

1.34 billion Indians to stay at home

On Tuesday night (March 24th), India’s Prime Minister N. Modi ordered a 21-day lockdown starting at 12:00 am Wednesday (March 25th).  This is the world’s most extensive COVID-19 lockdown.  About 1.34 billion Indians must stay at home.  According to the Prime Minister’s directive, all nonessential services such as markets, shopping malls, and public transport have been shut down.

However, the Prime Minister’s effort to stop the spread of COVID-19 is likely to lead to calamitous damage.  Farmers cannot tend to their fields, manual laborers have no work, and there have been complaints that the law enforcement officers are harassing online pharmacists and retailers.  Not to mention, countless people are running out of money.

Professor Jayati Ghosh of Jawaharlal Nehru University, warns that the kind devastation this 21-day nationwide lockdown will cause to the bottom 50 percent of the employees in the informal sector is unimaginable.

Challenges of a nation-wide lockdown

Every country that goes into a nation-wide lockdown faces a significant economic impact.  That means telling over 1.3 billion Indians to stay at home puts hundreds of millions of jobs at risk.  Official statistics from 2011 to 2012 (the most recent and verified data available) reveal that there were about 400 million people in the country’s labor market.  More than 50% of these people were self-employed, and about 121 million people were casual workers.

Let’s face it; the nationwide lockdown will strike India’s cleaners, construction workers, household workers, and small business owners and their employees.  Indeed, every Indian is already feeling the impact of the lockdown.

But all isn’t lost

The Ministry of Labor and Employment urged businesses not to terminate their workers or reduce their salaries.  Prime Minister Modi also expressed his concern for the millions of people who depend on a daily wage.  He said, “In such a period of crisis, I urge the business world and better income sectors of our society to look after the interests of the people they serve.”

“In the coming weeks, these individuals might contact you or your offices.  Try as much as you can to treat them with empathy. Don’t cut their salaries.  Remember, they need to protect their loved ones from illness and run their homes, just like you.” Said Modi.

Yogi Adityanath, the chief minister of Uttar Pradesh State, said that each of the daily wage laborers in his state would receive 1,000 Rupees (about $13) through direct transfer.  The minister’s directive will help about 1.5 million people meet their daily needs.

A few days ago, the government announced an economic stimulus package worth $22.5 billion (1.7 trillion Rupees) in a bid to help hundreds of millions of low-income Indians to cope with the nationwide lockdown.  According to Nirmala Sitharaman, India’s Finance Minister, the package will be distributed through direct cash transfers and food security measures for low-income households.

Indians are crossing their fingers

According to JPMorgan, an emerging market economist, the $22.5 billion stimuli package may not be enough to cushion the country’s economy from the impact of the 21-day nationwide lockdown.

Let’s face it; 60% of the country’s economy will be shut down for three weeks, and this is the estimated minimum.  It could take longer because the nation’s healthcare system is so stretched.  And most experts believe that the lockdown directive would reduce the country’s annual GDP significantly.

The post Coronavirus Outbreak in India: Is the Country Prepared for the Economic Impact of a 21-Day Nationwide Lock-down? appeared first on STL.News.

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