2020-21 will go down in history as the year of the coronavirus pandemic break in the life and ethos of humanity. It altered economic activity, finance and, more generally, life and livelihoods in a drastic and deep way that may take several years to heal. The pandemic also exposed the fragility of health care infrastructure and the inadequacy of health spending over the years. The extent of misery and the loss of human lives has left indelible fissures and several lessons for the future.
Besides the toll on life and living, the year 2020 was ravaged by output and employment losses unprecedented in history, globally and in India. The pandemic also turned out to be highly inequitable–it is estimated that around 95 million additional people around the world have been forced into extreme poverty during the year, with 80 million more undernourished, mostly in low-income countries. In India, the second wave of the pandemic along with high inflationary pressure is likely to subdue the economic recovery process.
Just a year ago when the World Health Organisation (WHO) declared Covid-19 a pandemic and India imposed a strict lock-down in March, a deep despondency and risk psychosis became pervasive. Since then, lives have been lost, surviving life has been disrupted and lifestyles have been fundamentally altered. In India, some areas of activity, especially contact intensive ones, have been deeply scarred while others such as agriculture and allied activities, information technology, highway infrastructure, railway freight and electricity demand have shown a rare resilience.
Almost all sectors of the economy have been hurt. One of the most vulnerable sectors is the retail industry, which already has been reeling under the impact of the pandemic and the localised lockdowns. Real estate, one of the largest employing sectors in the country too was severely impacted because of the resurgent number of Covid cases. The pandemic has also severely impacted travel demand including sectors such as aviation, tourism and hotel.
The dizzying rise in the prices of vegetables, fruits and several eatables has increased the difficulties of the common man in the middle of a resurgent pandemic. We are seeing lower consumption and services activity due to increased social restrictions that are being put in place in India both by the Centre and state governments to tackle the new outbreak. India will always be a consumption economy, and any strain on the retail industry cripples the entire value chain, which involves manufacturing, entertainment, right down to artisans and other micro-enterprises, leading to layoffs and downscaling or even shutting down operations widely.
There is a need for a coordinated effort at handling the second wave of the pandemic at all levels. Localised curfews and lockdowns are already in place in most states. While implementation of stricter rules to curb the spread of the pandemic is necessary, it is also important to calibrate a balance between lives and livelihood. The actual impact of the second wave on the Indian economy depends on how effective the country’s containment policies turn out to be, and if they don’t hurt the important sectors of the economy.
Further, what is most important is eternal vigilance in terms of pandemic preparedness since this pandemic is not going away for some time. This includes priority for upscaling health spending and health infrastructure, faster rollout of vaccines and vaccination while building up stocks, investing in research and development as vaccine developers/producers are challenged by new variants of the virus. Prudent and preemptive pandemic protocols and other Covid-appropriate behaviour are very vital in the fight against the pandemic.
