To restart, revise national strategy
India is now entering the last week of the nationwide lockdown. Whether or not the lockdown has helped “flatten the curve” and prepare the health care system is a matter of debate. But one thing is clear. So far, the lockdown has inflicted far greater economic damage on India than the disease itself. The coronavirus disease (Covid-19) is not disappearing, and we have to find less damaging ways of managing it. Our policymakers may be coming to this conclusion too, as calls for extended lockdowns are giving way to “learning to live” with the virus. The graded easing of restrictions to economic activity and mobility since May 4 is the first step in this direction. But moving toward a sustained resumption of economic activity while managing Covid-19 will require a complete overhaul of the institutional and governance frameworks deployed so far. Administrative fiat, the preferred modus operandi, will only cause further damage.
First and foremost, the policy approach to the migrant crisis will need to be reset, urgently. Migrant workers have long remained invisible to policy and politics. In their determination to walk home, they made themselves heard. But the policy response in these last weeks — from the failure to provide adequate food and cash relief to the hasty attempts at responding to industry demands to hold labour captive and pushing ill-conceived labour reforms — has exposed deep fault lines in the political economy dynamics that shape State mediation of labour-capital relations. The current policy choices are a reflection of how precarious workers rights are and the abdication of the State’s responsibility.
The lockdown made visible the indignities migrant workers suffer. But it also served as a reminder of how effectively workers can protest against the State. Workers voted with their feet, choosing to undertake a long, arduous journey home rather than face the uncertainties of inhospitable cities. A return to work, crucial for kickstarting the economy and protecting worker interests in the long- term, will need the State to recognise worker protests and put in place trust-building measures that protect rights and restore dignity. Rather than rush to dismantle labour laws, the Centre and states will need to work in close coordination to put in place an expanded social protection system. This will serve as the foundation for the restoration of trust and an eventual return to work. This is not to ignore the reality of India’s labour laws, the hurdles they pose to productivity and the need for rationalisation. However, this cannot be done by disregarding worker rights. The debate on reforms needs to be reopened and re-imagined.
Second, reset the institutional framework for Covid-19 crisis management. To impose and maintain the lockdown, the Centre invoked the Disaster Management Act (DMA), 2005. The institutional framework of the act legitimised a centralised, command-and-control approach to Covid-19 management, implemented through administrative diktat. Within days, this approach began to show its limits. The difficulties in moving essential goods and regular breakdowns in supply chains — recall how the procurement of rabi crops in Punjab hit a roadblock because jute mills in West Bengal were closed, making gunny bags scarce — exposed the absence of inter-state coordination in critical aspects of the economy. In the course of time, administrative diktats under DMA served to exacerbate the problem as the home ministry took to making decisions on the minutiae of economic activity in states and then issuing follow-up clarifications in response, leaving in its wake a confused and bewildered public and local bureaucracy. With partial economic activity currently planned in red and orange zones, the need for coordination to maintain supply chains and negotiate the process of opening state borders will increase. DMA is the wrong institutional framework. It must give way to a framework that privileges coordination over centralisation.
Coordination failures apart, the Centre’s silence on the nature of fiscal support to states (despite a near 90% fall in revenue in some states and repeated requests from chief ministers for central government action) underscores a second major fault line in fiscal federal relations — the absence of an institutional framework to negotiate Centre-state relations. The inter-state council, as this column has repeatedly argued, needs to be revived urgently.
Third, reset communication. The lockdown has been managed through a plethora of over 3,000 orders laced in bureaucratese, commanding citizens and bureaucrats alike, threatening them with penal action, but never offering a rationale for decision-making. Orders can coerce citizens into complying with State lockdown rules but not to open up. Firms and workers face an uncertain future, and to make rational choices, they need confidence. This will come from an altogether different type of communication — one that replaces orders with a credible road map for economic revival. The Centre’s failure to offer this road map seven weeks into the lockdown is the biggest hurdle to recovery.
Writing in these pages days after the first lockdown was announced, I had argued that the lockdown would put the State through a severe test. Seven weeks later, rather than coming out on top, the lockdown has exposed critical fault lines in the State, laying bare serious gaps in its already weakened capacity. The challenge of exiting the lockdown, will require the State to reset its response frameworks in ways that credibly navigate these fault lines to build trust and confidence in people and markets. This is a tall ask for a State that has so far failed to rise to the challenge. But if we fail to press the reset button now, the consequences will be disastrous.