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Unmaking India Remaking Indians

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Unmaking India Remaking Indians
Unmaking India Remaking Indians
Kumar Chatterjee - 02 June 2021

70,00,000. That’s about 8 per cent of India’s labour force. That’s the number of people who were left jobless in April alone. A higher number of comrades are likely to join in May as the virus continued to ravage the nation on its second onslaught.

Which one is a bigger cause for concern? Seven million people falling out of jobs in just one month or three lakh lives being snuffed out in just one year? Both the realities inexorably drive home the most pertinent question of this time: How to save whatever is left?

The second wave of the pandemic is expected to cost India around $74 billion or Rs 5.4 lakh crore in the April-June 2021 quarter, predicts Barclays. The brokerage estimated the economic cost of the partial lockdowns that various state governments have imposed to check the spread of the disease at $8 billion per week in May – up from $5.3 billion a week in the last two weeks of April – and well above the $3.5 billion a week estimated early in the second wave.

India’s bleeding coffers has begun weighing on its human capital with more than 230 million people skidding below the minimum wage floor. A steep plunge in consumption reflects in the sluggish growth in factory output despite a low base effect of April 2020. Partial lockdowns drove mobility down and a sharp sequential contraction in e-way bills indicates slowdown in economic activity.

These downside risks can potentially impact the recovery process for the economy. The Indian economy was valued at Rs 145 trillion (GDP at constant prices) in March 2020. Record number of deaths and rapid pace of infection in the second wave prompted most agencies to revise their growth projection for the Indian economy to 7 to 9 per cent for 2021-22. On a low base effect, this level of GDP growth hints at a sustained slowdown.

Although a steady decline in the daily fresh cases of infection and a reducing number of deaths imply that the second wave is on the wane and help revive the investor sentiment, the whiff of a third wave could be a drag on the economic revival. The Barclays report says the economic cost would rise by at least a further $42.6 billion if another round of prolonged and stringent lockdowns are imposed later this year.

In the absence of a vaccine, the government had to make a binary choice between life and livelihood last year. It had locked down the country even before the crisis escalated to the level where it was needed and, consequently, it had to be revoked at a premature state. This time, the government banked too much on the vaccine perhaps without adequately taking stock of the logistics and the supply channel. The result was seen in daily infections making a global record shooting past 4.14 lakh, and Covid deaths docking India to the top-three league with toll mounting over three lakhs.

The impact on businesses was evident with the stock markets showing wild volatile movements, consumer spending, especially in discretionary products, going downhill, manufacturing and services facing the brunt of lockdown and restricted mobility, and commodities going for steep corrections. Aviation, hospitality, restaurant, tourism, media and entertainment, microfinance, retail and real estate have been hit hardest by the uncertainties wrought by the second wave.

Prudent decision by the Reserve Bank of India and upbeat corporate earnings, however, helped a deeper wound on the fiscal front.  

Large-scale unemployment, rising inflationary pressure, deepening financial crunch and the constant fear of staggering healthcare costs since the outbreak of the second Covid wave have dragged life into severe uncertainty. The average Indian is now all the more cautious to safeguard their todays, rather than securing their tomorrows.

Despite the odds, the life in Covid has been a learning experience for every individual, irrespective of their economic and social background. When we question, how to protect what we are left with, we need to look deep into this learning for an answer.

A health cover never seemed so precious, neither did the small amount of money left in a bank account for a rainy-day matter so much. Distribution of wealth across various asset classes suddenly became an immediate task and we comprehended the significance of sharing every detail about our assets and liabilities with our family members, especially when the breadwinner’s life is in question. We have understood how we can ensure future for our family members by making a simple will.

Perhaps Covid has taught us the worth of life more closely and meaningfully. We have learned to care more for ourselves and our loved ones, and realised the importance of being more methodical when it comes to protecting our families.

In a post-Covid world, we are trained to face the reality head on, and triumph.


kumar@outlookindia.com

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