Kerala offers the rest of India a model to fight the pandemic
Calamities, it seems, bring out the best in Kerala. Be it the floods of 2018 and 2019 or the current coronavirus pandemic (Covid-19), the Keralites’ collective resilience and solidarity across religious and political divides set the state apart. It was in Kerala where the first Covid-19 case in India was detected on January 30, and exactly two months later, the state had 235 cases, the maximum number reported in the country. Fast forward to April 16, the state recorded 394 confirmed cases, 245 recoveries and two deaths.
The credit for this incredible achievement primarily goes to effective grassroots-level government institutions and a proactive, level-headed political leadership.
People in the remotest corner of the state have access to medical attention and ration shops, and, if required, the state government intervenes to ensure that the basics reach the needy. Migrant labourers constitute nearly 10% of the state’s population. Due to an unambiguous communication, a majority of them left for their homes after the state announced a partial lockdown, well ahead of the national lockdown.
However, health is just one of the many battles. It is time to confront the elephant in the room: Securing the life and livelihood of the people. If the former was a battle, the latter is nothing short of a war, something that the state governments cannot fight on their own, without the Centre leading from the front. New Delhi could leverage the lessons learnt from Kerala’s battle for health.
Covid-19 is perhaps the single most impactful economic crisis of our lifetime. It has shrunk our needs to the basic necessities of life – food, medicines, electricity, water, and communication technology. As the coronavirus grinds the world to a halt, the crisis can kill millions due to hunger, and can even bring serious civil unrest.
We need to think of crisis management and stabilisation of the economy and its recovery, which might even spill over to the second half of 2021. We must be prepared for the long haul.
India will need an economic stimulus package equivalent to 10-15% of its GDP. This is unlikely to cause inflation in the short-term, considering the subdued demand. Of course, it will aggravate the fiscal deficit and government debt, but that should not be of prime concern now. Several other countries have taken this route – the United States, the United Kingdom, Japan, Germany, Korea, Italy, France and the United Arab Emirates. Japan, for example, announced an economic stimulus package of $1 trillion, which is 20% of its GDP, whereas the package announced by India so far is below 1% of its GDP.
How the stimulus package is distributed to achieve the desired results is another major question. It is a difficult proposition in a country like India, with the majority employed in the unorganised sector. Over a three-month period, a considerable part of the relief package should be transferred directly into the accounts of the most vulnerable people, especially the daily wage earners. In the organised sector, employers should be paid an employment subsidy to help them keep the people employed. For example, the UK government provides up to £2,500 per month per employee as a payroll subsidy to the employer.
Such an unprecedented crisis requires proactive central governments and central banks, because only they can ensure liquidity and cash flow. This is the time to seize the moment. Tough times do not last long, but tough people and determined communities do. If Kerala can do so well against the virus, India can surely do so, too.
VK Mathews is founder and executive chairman, IBS Software
The views expressed are personal