It is critical that policymakers understand the full impact of the pandemic on the economy and human development.
The coronavirus pandemic has defined life for the entire world over the last two years, with India being among the hardest hit. According to the Worldometer COVID-19 dashboard, India stands second in the number of reported cases and third in the number of deaths due to COVID-19. While the pandemic is not over, governments all over the world (including the Indian government) started to lift restrictions as vaccination rates rose and the cases ebbed. As the focus shifts back from COVID-19 management to economic management, however, it is imperative for policymakers to first have a comprehensive understanding of what impact the pandemic had on socioeconomic and human development indicators in India.
The initial response of the union government was a stringent nationwide lockdown imposed on March 25, 2020, which lasted almost 70 days. This triggered a massive migrant workers crisis, which was dubbed the largest migration India has seen since partition. The halting of the Indian economy also led to a record contraction of 22.4 percent and 7.3 percent in the first and second quarters of fiscal year 2020-21, respectively, plunging the Indian economy into a recession. While the economy has since recovered to some extent, there are concerns that the recovery is K-shaped, meaning that the economic growth is happening but alongside a rise in income inequality, with small businesses and household segments still facing a compression in their revenues and disposable incomes, respectively.
This is partly supported by the record inflation that has marked the Indian economy’s recovery, with the Wholesale Price Index (WPI) rising to 14.55 percent in March 2022, marking double-digit growth for 12 consecutive months. The CPI for February and March 2022 also crossed the 6 percent upper threshold of the inflation tolerance limit set up by the Reserve Bank of India. The fiscal deficit also peaked at 9.8 percent during 2020-21.
A look at the Centre for Monitoring Indian Economy (CMIE) unemployment dashboard tells us that the unemployment levels spiked above 20 percent during the stringent lockdown. The national unemployment rate has since declined, but the situation remains alarming in states like Haryana, Rajasthan, and Jammu and Kashmir, where unemployment levels are still above 25 percent as of April 2022. It is not just the unemployed who were unfortunate. According to the “Future of Work” report, one in three employees are suffering burnout due to excessive workload while another one-third are facing stress related to work. In other data collected by CMIE in April 2022, India’s labor force participation rate dropped to 40 percent with an alarming 9 percent of women participating in the workforce. This exodus is ominous since it puts into question how India will reap the benefits of a much-hyped demographic dividend.
According to the Annual Status of Education Report 2021, government schools saw an improvement in enrollment (from 65 percent to 70 percent) indicating a shift from private schools to government schools. The number of children paying for private tutoring has also increased, which highlights the rise in economic burden on parents owing to shut schools. It also throws light on the digital divide with more than 70 percent of students having either partial or no access to smartphones for online education.
When it comes to public health, the devastation of the second wave in April-May 2021 is etched in the memory of Indians. From hospitals sending desperate oxygen SOS messages to overburdened crematoriums working at full capacity, the suffering was well documented. The shortage of medicines like remdesivir and fabiflu precipitated the crisis. A call by Prime Minister Narendra Modi led to unprecedented donations by Indians to the PM CARES fund which was established in March 2020 to boost the health system to combat COVID. The fund had a closing balance of 30.76 billion Indian rupees in FY2020 and 109.9 billion rupees in FY2021 but by March 2021, only 35 percent of the available funds were allocated for COVID-19 relief while 65 percent were lying idle. The WHO has also flagged India for underreported COVID-19 deaths, with estimates around 4 million, in its latest report on excess deaths, thereby raising questions on the surveillance infrastructure of India. A silver lining during this crisis was the science-based approach in dealing with the public health crisis and a robust vaccination process, which saw Indian vaccination rates rise rapidly.
There is no doubt that the pandemic has negatively impacted the Indian economy across sectors, but leaving the effects unstudied would be a massive mistake by the government. The slogan of turning this crisis into an opportunity will only attain meaning when a detailed study is conducted inquiring into the causes and impact of the sequence of events over the various waves with an emphasis on the shortcomings at central and state levels so that a plan of action can be prepared to make our economy stronger and resilient for future waves and pandemics. The loss of livelihoods and incomes due to lockdowns and the recession require deeper study, and so does the apparent K-shaped recovery trend. The drag of unemployment in specific states needs a remedial course of action, which can happen only after the factors are understood. There is a need for a study on the impact of labor laws’ relaxation by various states and if they were used to exploit employees leading to their burnout.
While the state governments are upbeat over rising enrollment levels in government schools, they need to understand the resulting requirement of teachers to maintain the optimal student-teacher ratio and identify the infrastructural challenges arising out of this influx of students in an already underfunded public education system. The government must expedite the release of the National Achievement Survey 2021 so that the impact of school closure on learning levels can be understood in detail so that adequate remedial measures can be framed by states and schools.
The idle funds in PM CARES should also be a point of concern since the funds were activated for the construction of thousands of PSA oxygen plants only after the second wave surfaced, despite the existing precedents of countries facing oxygen shortage during earlier waves of the pandemic. The shortage of medicines even for curable diseases like black fungus should be examined so that such a situation doesn’t arise in the future.
A high-level independent commission with experts and central and state officials needs to be constituted by the government of India with adequate powers to bring out a comprehensive and transparent report on various facets of COVID-19 handling and its socioeconomic impact. Comprehensive recommendations to the government for course corrections are the need of the hour so that the derailed economy is put back on track for a speedy and inclusive recovery.