The government is discussing a calibrated reopening of the economy with industry associations and experts who have said a prolonged nationwide lockdown could lead to shortfall of essential goods, and that it would not be easy to stop the economic engine altogether during the battle against covid-19 pandemic.
Prime Minister Narendra Modi has already indicated it will not be possible to remove the lockdown completely.Many states have also recommended extending the lockdown, and Odisha and Punjab, for that matter, have already extended it. The government is expected to take a call on this after PM Modi’s conversation with chief ministers on Saturday. A spokesperson in the Prime Minister’s Office (PMO) declined to comment.
“A very long period of shutdown can lead to other problems, including social unrest. Keeping this in mind, the Prime Minister has recently urged states and the Centre to formulate a common exit strategy to ensure staggered re-emergence of the population once lockdown ends,” State Bank of India’s (SBI) research publication, Ecowrap, said in its latest edition.
A calibrated strategy can help in rapid economic recovery when the lockdown ends, it said. “The good thing is that banks have witnessed good traction in credit (term and working capital requirements) in the last 7-days of the year ending March 31, 2020. It seems companies/corporates are preparing themselves for a surge in demand after the lockdown period. As per our estimate, the incremental credit offtake would have been ₹210000 crore in March of which the estimates for agriculture, industry, services, and personal loans are ₹10000 crore, ₹120000 crore, ₹60000 crore, and ₹20000 crore, respectively. Clearly, the tide seemed to have turned as far as bank credit is concerned in March.”
The research paper proposed a staggered exit strategy. It suggests giving first preference to agriculture and procurement as 50% of the population is dependent on agriculture and allied activities followed by “some relaxation” in inland transport and retail trade (as it is supports over 250 million households). Next, it has proposed a limited duration opening of hotel and restaurant services, including home delivery, because they are big employers. The other crucial activity is construction, which can be allowed to start activities in districts that have no cases or limited cases of covid-19, the publication said.
Industry executives said both the PMO and the finance ministry are working on a strategy based on their inputs.
The Federation of Indian Chambers of Commerce and Industry (Ficci) has told the government that a country like India cannot afford a prolonged lockdown that lasts for months. “The exit strategy, thus, should aim towards bringing about a fine balance that on one hand normalises economic and social activity and yet contains the disease from spreading and getting out of control,” it said.
“CII has called for all sanitation and hygiene, shift intervals and social distancing measures to be instituted on a self-certification basis by enterprises to start operations. At all times it is important to look at smooth movement of goods and related men and material,” CII’s director general, Chandrajit Banerjee, said. Associated Chambers of Commerce and Industry of India (ASSOCHAM) secretary general, Deepak Sood, favoured a gradual exit from lockdown in select areas, with well laid out protocols for the safety of the workforce. “Without compromising on the safety of our people, the well- managed lifting of the lockdown would at least partially restore the near $3 trillion economy to its shape,” he said.
For the export sector it is a matter of survival, said Sharad Kumar Saraf, president of the Federation of Indian Export Organisations (FIEO). He said the industry is staring at job loss of about 15 million due to half the export orders being cancelled.