Covid-19: A hard choice between saving lives and saving economy

In India, the Modi government started to unlock the economy from June 8 after five rounds of lockdown between March 5 and June 7. The unlock-measures led to the opening of the economy and an increase in revenue collection but were also accompanied by a steady rise in the Covid-19 cases.

New Delhi: The recent increase in the number of confirmed Covid-19 cases in both India and the world comes at a time when the countries just started to relax lockdown measures to revive the economy. In India, the Modi government started to unlock the economy from June 8 after five rounds of lockdown between March 5 and June 7. The unlock-measures led to opening of the economy and increase in revenue collection but were also accompanied by a steady rise in the Covid-19 cases. In June, India’s GST collection almost touched the pre-Covid level but the number of confirmed cases also went up from 2 lakh to 6 lakh during the same period.

Last month, the World Health Organization had warned the countries to relax the lockdown measures with extreme caution as it may lead to a possible resurgence in the Covid-19 infections.

Some economists have also expressed the doubts over the efficacy of unlocking measures in reviving the economy saying that economy cannot be revived unless medical science finds an answer to the novel coronavirus. The highly infectious virus has killed more than 17,400 people in the country and over 5,18,000 people worldwide.

“Scientific development which should come for dealing with the Coronavirus is a different issue. But in the meanwhile as we face more and more number of cases coming up, it's a hard trade-off between dealing with the Corona and dealing with the livelihood of the people,” said R Gandhi, former Deputy Governor of the Reserve Bank of India.

“It's a hard choice,” he said in response to a question by ETV Bharat.

The number of confirmed Covid-19 cases in the country has already crossed the mark of 6,00,000, the fourth highest in the world after the USA (27,31,000), Brazil (14,10,000) and Russia (6,54,000), according to the worldometer (www.worldometers.info), which tracks the data.

In late March, Prime Minister Narendra Modi’s government imposed one of the most stringent nationwide lockdown anywhere in the world to slowdown the community spread of the virus. However, the lockdown also brought the economic activity in the country to a grinding halt.

The GST collection data released on Tuesday revealed the extent of loss to the businesses during the lockdown period. The gross GST collection in the month of April came down to Rs 32,294 crores in comparison with Rs 1,13,866 crores collected during the same month last year, a decline of 81,572 crores or 72%.

However, as the government started to relax the prohibitory measures, the collection showed improvement, going up to Rs 62,009 crores in May and Rs 90,917 crores in June.

The June GST collection is just down by 9% in comparison with the same month last year which shows economic activity is gradually returning to pre-Covid levels.

However, almost at the same time when the government began its unlock process which also reflects in tax buoyancy, the number of Covid-19 cases in the country also started to rise significantly.

According to the worldometer, there were 1,98,370 confirmed cases in the country, which went up to 3,43,026 cases on June 15, a rise of 1,44,656 cases in just 15 days. On June 26, the number of confirmed Covid-19 cases in the country crossed the mark of 5,00,000 cases and on July 1, the number of confirmed cases crossed the mark of 6,00,000 cases.

A growth of over 4,00,000 in cases in a matter of one month, from 1,98,000 to over 6,00,000 confirmed cases between June 1 to July 1.

It prompted Prime Minister Narendra Modi to observe that there was a sense of complacency among the people at a time when there was a need to observe the social distancing and hygiene norms in earnest.

While announcing the extension of Pradhan Mantri Garib Kalyan Ann Yojana (Prime Minister Poor Welfare Food Grain Scheme) on Monday, that seeks to provide staple food to nearly two-third of the country’s population till November this year, Prime Minister Modi also urged the people to strictly observe the social distancing norms and also ensure that others also follow them.

However, extension of the scheme till November also reflects the government’s own assessment that Covid-19 is likely to persist longer than what was anticipated earlier.

When finance minister Nirmala Sitharaman announced the welfare measures in the last week of March this year, most of the welfare measures under the PM Garib Kalyan Yojana were aimed at ensuring the staple food and some disposable cash in the hands of nearly two-third population of the country for three months – April, May and June.

It shows the government also anticipated that it will be able to contain the pandemic by June. But the extension of free ration scheme till November shows the government has also prepared for a long haul.

R Gandhi says the authorities will have to strike a balance between the two choices of saving lives and saving livelihood.

“If they decide in favour of the economy then someone may take a different position, if they decide in favour of people's health then others may take a different position, but this is not the right approach as there is no singular solution for the today's situation,” said the former Deputy Governor of the RBI.

“I'm hopeful that authorities will take the right decision in the best interest of people’s health and livelihood, and we should accept that,” he added.

(Article by Krishnanand Tripathi)