📰 The cost of the lockdown is pegged at about $120 billion
Complete stop would put over 45 mn migrant daily wage earners out of work; government needs to do more to rescue industry and services if they’re to protect jobs
•The complete 21-day COVID-19 shutdown of most economic activity has created new roadblocks, causing severe disruptive impact on both demand and supply side elements across sectors. The cost of the lockdown is pegged at around $120 billion (approximately Rs. 9 lakh crore) or 4% of the GDP.
•Further, 90% of India’s workforce is employed in the unorganised sector and this lockdown will effectively put over 45 million migrants living off daily earnings out of work. Sectors like construction projects, mobility services, housekeeping and other informal sector employment will come to a sudden halt. The manufacturing sector faces a triple challenge. First, there are going to be serious supply chain disruptions not just when dealing with foreign parties, but also the domestic industry. Second, sectors like automobiles, pharmaceuticals, electronics, chemical products etc., are facing an imminent raw material and component shortage.
•Third, the shutdown and resulting loss of revenue is certain to cause a number of bankruptcies and closures, especially in the MSME sector with corresponding disruption to supply chains.
•On the demand side, several industries would get impacted starting with the consumer durable goods and will cascade to other intermediate goods and basic goods. The government was the major spender on investment in the infrastructure sector, which will slowdown now with resources and attention being diverted.
•Hence, industries like steel and cement, which did well, last year, will stumble.
•The services sector will see a fall in demand. These include aviation, hotels, restaurants, tourism, retail malls etc. The real estate sector, which was already in deep trouble, could well slide even more,in the medium term at least.
•Even 10-20% job losses among its 7.3 million employees in restaurants across the country would mean up to 15 lakh unemployed. Any delay in addressing the economic consequences will lead to massive job losses.
•SICCI suggests the following: the Reserve Bank of India has to address two problems: Transmission on rate cuts has been inadequate.
•Second, rate cuts by themselves are unlikely to stimulate demand as the primary cause for demand contraction will be on account of consumer confidence being low. Though the RBI has provided some relief to industries, it is inadequate considering the gravity of the situation. SICCI feels that only the stronger firms in any sector can have the capacity to keep salary payments going, in the absence of any revenue earnings.
•Firms cannot be expected to drain their already stretched cash-flows. To tide over the present crisis, banks should give three months’ salary as overdraft facility to the employees of companies which can be escrowed to the companies with a nominal rate of interest not exceeding 3%.
The same could be recovered from companies over a period of three months, six months after commencement of production, post the present crisis. On electronic component and semi-conductor industry, the impact will be felt in the areas of logistics, packaging and testing. A special package should be designed for this highly skilled industry.
•In the case of contract workers, many casual and informal workers are directly or indirectly dependent on the survival of small and medium enterprises for jobs.
•The government could lend support through tax holidays and zero-interest loans for three months. In the case of services sector, the government should consider contributing the employer’s share of PF for all employees earning less than Rs. 20,000 per month and ESI contribution for all employees earning below the statutory threshold level of Rs. 21,000 per month, for a period of 12 months. For firms that have difficulties in managing their cash flows, the government should extend a government-backed loan guarantee, on the basis of which firms can raise loans on preferential terms to the extent of 25% of their existing working capital arrangements. All rating agencies may be advised to suspend rating reviews till the lockdown is over. The RBI needs to come up with a special window to provide liquidity to NBFCs and microfinance institutions in this period. The government should ensure that all refunds across tax legislation — up to75% should be given without any verification and any wrongful claim can be recovered without any interest.
•Private sector hospitals need to be encouraged to provide specific number of isolation wards to the poor and extended financial assistance on soft terms.
•Export incentive schemes like Sec. 10AA for SEZ units under the I-T Act should be extended for one more year – i.e up to March 31, 2021. Further, the recent Import Export Policy should be extended for one more year.
•In the absence of new Export/Import Policy, all export incentives viz MEIS,SCIS, EPCG license etc. should be extended for one more year. All charges including, port charges, penal charges, demurrages should be waived. Further, all agencies viz ports, air cargo terminals, all custodians of cargo and all shipping lines have to waive penal charges.
•Fixed charges levied may be waived and the industry may be charged only on the actual consumption of electricity. Immediate refund of IGST will help exporter in dealing with liquidity issues.
•In order to have Business Continuity Plans where the economy is better prepared for a work from home mode, the government should halve GST rates on all laptops, routers, cloud services, dongles and such other equipment and services.
•All companies should be asked to devote their CSR funds exclusively towards creation of clean quarantine centres, and addition of hospital beds, ventilators and PPEs, besides investing in testing and other facilities aimed at preventing the spread of the virus.
•High Networth Individuals should be encouraged to do likewise. Additional tax concessions may be looked at for this sector. Women’s Self-Help Groups and the informal sector should be asked to produce masks, hand sanitisers, among others in a big way. Banks should be asked fund these activities and State governments should arrange for the marketing of these products to their local primary health centres.
It needs to develop the capability to mass-produce kits
•Real-time reverse transcription-polymerase chain reaction (RT-PCR)-based tests are recommended as diagnostic tests for COVID-19. The test detects the presence of viral RNA in human samples. PCR is a process where a few copies of DNA are amplified to produce millions of copies. In addition to human samples, the test needs primers, probes, enzymes, nucleotides, enzyme cofactors, and buffer solution. Primers and probes are short stretches of DNA, specific and complementary to regions of the viral genome or target region. Unlike primers, probes are labeled with fluorescent molecules that bind the target region in between where the forward and reverse primers bind. The test uses two primers (forward and reverse) and one probe against each target region of the viral genome. The WHO recommends using at least two target regions for the diagnostic detection of the virus. In the test, first, the viral RNA is converted to DNA. The DNA is then amplified with the help of enzymes, primers, and probes. Each step of the test uses multiple cycles of target melting, primer binding, extension, and probe dissociation. The steps are repeated for 15-40 cycles to produce millions of copies of the viral target DNA, each with its fluorescent signal, which is read by an instrument.
For accurate results
•Although RT-PCR tests are quantitative, sensitive, and specific, assay and quality-control measures are essential to get consistent and accurate results. A positive control verifies that the assay is running as intended and identifies authentic negative samples. An internal control checks the process of RNA extraction from the nasal or throat swab and identifies sample-to-sample variation. A negative extraction control verifies the absence of cross-contamination during RNA extraction and RT-PCR reaction set up. Additionally, no amplification control and no template/ negative control are essential in the RT-PCR set up to reduce erroneous test results. Labs around the world are using primers and probes against different SARS-CoV-2 genes/regions in their assays successfully.
•The main difference between tests done in a research lab and a diagnostic lab is that the results from the latter are used for clinical decision-making. Therefore, the diagnostic labs need to be certified and follow the standard operating procedures (SOP), maintain directionality of sample flow, and make sure that the lab personnel are properly trained. Also, all diagnostic labs need to maintain documentation on all tests and reporting. RT-PCR results can vary from lab to lab due to many variables. Hence, regulatory agencies mandate the use of SOP, specific lot numbers of reagents and instruments, and software to run diagnostic tests.
Challenge for India
•The Indian Council of Medical Research (ICMR) has approved 176 labs, including 47 private labs, to conduct the tests. The U.S. Food and Drug Administration (FDA) has approved 20 manufacturers and kits for diagnostic testing for COVID-19. The first test kit that received FDA approval, the Cobas SARS CoV-2 kit from Roche, is also approved in India. The second, the TaqPath COVID-19 Combo Kit from Thermo Fisher, is in the process of getting validated by the ICMR labs. Both these kits are optimised with specific instruments. Additionally, ICMR has validated kits from three Indian manufacturers. Although ICMR has stated that the agency will provide the primers, probes and master mix for RT-PCR to the select 123 government labs, it is unclear whether they are the same primers and probes as per the U.S. CDC protocol or the agency has designed its own. For private labs, ICMR has issued an advisory and recommends the use of any FDA-approved kits with primers and probes. As long as proper certification and training are in place, any accredited lab using the WHO/CDC suggested protocols can yield satisfactory results.
•Currently, the import of some critical reagents, especially the probes, makes the tests expensive to offer in India. India needs to develop the capability to mass-produce kits and all its components within the country. While developing and use of indigenous kits is beneficial in the current outbreak, it cannot take short cuts. While prioritising indigenous kit development, it must ensure that sensitivity, specificity, accuracy are in place before the kits get approved for broader use.
•India also needs to invest in developing alternate assays, like serological assays to detect the antibodies IgG and IgM in blood, to test for the infection. Unlike the RT-PCR test, the antibody-based test can help identify individuals who got cleared of the viral infection but were once infected. Antibody tests with similar accuracy and specificity as the RT-PCR test are needed for mass screening. Innovative tests will take interdisciplinary scientific effort and investment. Till then, India can use the existing tests in labs with accreditation and rigorous training to detect each of the COVID-19 cases accurately.
📰 A threat to food security
Keeping global food chains alive is crucial amid the COVID-19 crisis
•The COVID-19 pandemic is putting an enormous strain on public health systems around the world. Millions of people are in some form of quarantine. We know that the human toll will be high, and that efforts to turn the tide carry a heavy economic cost. To reduce the risk of an even greater toll — shortage of food for millions — the world must take immediate actions to minimise disruptions to food supply chains. A globally coordinated and coherent response is needed to prevent this public health crisis from triggering a food crisis in which people cannot find or afford food. For now, COVID-19 has not entailed any strain on food security, despite anecdotal reports of crowded supermarket sieges. While there’s no need to panic — there is enough supply of food in the world to feed everyone — we must prepare to face the enormous risk that food may not be made available where it is needed.
Disrupting food supply
•The COVID-19 outbreak, with all the accompanying closures and lockdowns, has created logistical bottlenecks that ricochet across the long value chains of the modern global economy. Restrictions of movement, as well as basic aversion behaviour by workers, may impede farmers from farming and food processors (who handle most agricultural products) from processing. Shortage of fertilizers, veterinary medicines and other input could also affect agricultural production. Closures of restaurants and less frequent grocery shopping diminish demand for fresh produce and fisheries products, affecting producers and suppliers, especially smallholder farmers, with long-term consequences for the world’s increasingly urbanised population.
•Uncertainty about food availability can induce policymakers to implement trade restrictive measures in order to safeguard national food security. Given the experience of the 2007-2008 global food price crisis, we know that such measures can only exacerbate the situation. Export restrictions put in place by exporting countries to increase food availability domestically could lead to serious disruptions in the world food market, resulting in price spikes and increased price volatility. In 2007-08, these immediate measures proved extremely damaging, especially for low-income food-deficit countries and to the efforts of humanitarian organisations to procure supplies for the needy and vulnerable.
Steps forward
•We should all learn from our recent past and not make the same mistakes twice. Policymakers must take care to avoid accidentally tightening food supply conditions. While every country faces its own challenges, collaboration between governments and the full gamut of sectors and stakeholders is paramount. We are experiencing a global problem that requires a global response. We must ensure that food markets are functioning properly and that information on prices, production, consumption and stocks of food is available to all in real time. This approach will reduce uncertainty and allow producers, consumers, traders and processors to make informed decisions and to contain unwarranted panic behaviour in global food markets.
•The health impacts of the unfolding pandemic on some of the poorest countries are still unknown. Yet, we can say with certainty that any ensuing food crisis as a result of poor policymaking will be a humanitarian disaster that we can avert. We already have 113 million people experiencing acute hunger; in sub-Saharan Africa, a quarter of the population is undernourished. Any disruptions to food supply chains will intensify both human suffering and the challenge of reducing hunger around the world. We must do everything possible to not let that happen. Prevention costs less. Global markets are critical for smoothening supply and demand shocks across countries and regions, and we need to work together to ensure that disruptions of food supply chains are minimised as much as possible. COVID-19 forcefully reminds us that solidarity is not charity, but common sense.
📰 Locking down two different Indias
While some can practise social distancing, most Indians simply cannot as they have no social security
•What could possibly have been the reason for Prime Minister Narendra Modi to give only a four-hour notice for the lockdown? If the requirement was to keep the population indoors, strictly enforcing social distancing, how abjectly this has failed! Lakhs of migrant labourers have been jostling to get any form of transport back home; walking and sleeping in the heat and rain, in the open, through day and night, dodging the police and sometimes even hiding under tarpaulin in trucks. Almost as many have died undertaking this inhumane journey as people have lost their lives due to COVID-19 so far. What answers does Mr. Modi have for them? This is the largest manually induced distress migration in independent India. Tragically, it could have been handled much better.
Decision without planning
•COVID-19 is a disaster that came with prior warning, and therefore did not warrant an arbitrary, unplanned and ill-prepared decision. The Prime Minister’s 8 p.m. top-down lockdown announcement was not accompanied by practical and necessary relief measures. It brought uncertainty, confusion, and insecurity to an unprepared people. The announcement was rapidly followed by suspension of all public transportation — again with practically no notice. A unilateral lockdown order, keeping millions of migrant labourers in suspended animation, was bound to fail. With doomsday predictions and no work, and no guarantee from the government, migrant labourers logically sought the security of their distant homes, like all of us have. They decided to travel any way they could, including by foot, to go home. Policymakers and the ruling elite have no clue about the lives of the unorganised workforce.
•Contradictory and uncoordinated government orders followed in rapid succession adding to the chaos. Bus services were suspended, and then orders were revoked. On March 29, for instance, with lakhs walking home, the Ministry of Home Affairs (MHA) issued orders to stop the home-bound and quarantine them for 14 days. The propagandists uttered platitudes of support reiterating mandatory ‘social distancing’. The pretended ignorance of how the labour force lives — crammed together, 10 in a room — makes such statements pointless. In the slum or basti, social distancing is a non-existent concept. No order will work unless the government recognises and addresses the dire circumstances of the so-called informal sector. Those secure in isolated rooms in spacious homes, with a huge food stock, cannot wish this problem away.
•This lockdown is shaping itself as the expedient response of an elite terrified of falling victim to a virus. There is clearly little imagination or application to work out a plan of action based on compassion and understanding of conditions on the ground. This virus upends the sharp divide of the two Indias we have manufactured. COVID-19 was spread by the callousness of those who arrived from abroad, many of them afluent and influential, and who violated quarantine. The lockdown has a disproportionate impact on the socioeconomic conditions of the poor and unorganised sector. Desperation has not robbed them of dignity or independence. There is surprisingly no anger being expressed — yet. All they want is to go home.
•A week of the lockdown has brutally exposed the callousness and indifference to the realities of India’s informal workers. Stranded without income security, transport or food, the walk home became a logical choice for these workers. Men, women and small children, wearing makeshift masks and walking for miles every day through different States, proclaim that if death comes, they would rather it be at home.
Ensuring food and transport
•People will stay where they are, only if real support is provided. It is impractical and perhaps impossible to force these workers into 14-day quarantine camps as the MHA order states. What’s worse are the consequent orders taking action against officers who responded to the human tragedy by organising transport, or the callous Haryana government order setting up “jails” for the migrants on the road. These workers are not criminals and fugitives. If the government can ship Indians abroad back to India at substantial cost, there is no reason why this transit can’t be better organised. Those already walking home should reach safely with proper screening en route, food in their stomachs, practical health protocols in their minds, and some reassurance in their hearts. When they reach their blocks, they can be put under observation, further screening, isolation, testing, and quarantine where required. Their families also have to be given minimum guarantees of food, health, and some income by the government for the next few months. We must remember that they are primary breadwinners, and the added anxiety of the survival of their families back home is also pulling them back.
•Draconian orders and platitudes will not work. Governments must show leadership, resolve, commitment, and compassion. Resources have to be effectively and optimally used. There is no excuse for hoarding the 58 million tonnes of current foodgrains stock when only four million tonnes are required by the PDS every month. As many have demanded, over and above the Finance Minister’s announcement of free grains to Food Security Act card-holders for three months, the government must use these resources to immediately provide States with at least an additional month’s quota, without conditions, to help prevent hunger amongst those who may have no cards. Hunger today not only walks the road, it stalks the land.
•We have enough material resources in the country. Districts like Bhilwara in Rajasthan, which are “corona-sensitive”, have already requisitioned private hospitals, resorts, schools and college hostels for dealing with the crisis. Whether such resources are in private or public hands, this is a time that they must be made available for all, and put to use on the basis of greatest need.
•While many front line functionaries such as sanitation workers, government officials and health care workers have been working zealously and extending assistance, the government needs to ensure that this response is uniform and persistent. Civil society must keep track of, and support, the most vulnerable. If supply chains of our most essential services are to be maintained, front line workers of all these services in the formal or informal sector must be given equipment, quick basic training, and adequate insurance. No life is more dispensable than the other.
•There can be no social distancing without social security. Critically, to pull through this as a nation, we must reduce our inequalities and persevere in this together. An already individualistic tendency has been reinforced by forced isolation. COVID-19 will affect the producer and the consumer. We will live, or die, in this interconnected world together.
