The lockdown will end slowly, but refinance states urgently
The government has already delayed a much-needed stimulus package for the economy, causing perhaps, irreversible harm to a range of businesses and industries. It is also now delaying the announcement of a support framework to states, which are spending more and earning much lesser than usual.Updated: Apr 27, 2020 18:40 IST
On Monday, in an interaction with chief ministers (CMs), Prime Minister (PM) Narendra Modi offered broad hints about the next steps in India’s battle against the coronavirus pandemic. The most significant takeaway from his remarks, even if it was not explicitly stated, is that the exit from the lockdown after May 3 will be gradual and phased. There will be — reading between the lines of the PM’s message to the CMs — no big opening up. Mr Modi made it clear that the lockdown has saved lives; he reiterated the importance of social distancing; and he underlined that special attention needed to be paid to “red zones” — which are home to larger clusters of coronavirus disease (Covid-19) cases. This indicates that in such zones at least, restrictions will continue after May 3.
The PM also touched on the need to “give importance to the economy”, even as the fight against Covid-19 continues, an indication, perhaps, that there could be some return to what will be a new normal after the deadline for the extended lockdown ends. One possibility is that more guidelines will be eased — at least in the so-called green zones, which are not affected by the pandemic. The PM did emphasise that efforts must be made to convert red zones into orange zones and orange zones into green zones (which are not affected by the disease or are free from it). While the PM did not give a specific sense of what further relaxations will be introduced — clarity on this would have been welcome — he did talk of the need to look at each administrative unit and suggested that much would depend on the inclination of state governments. Given the inclination of at least some states to extend the lockdown, this may mean a further delay in the revival of the economic activity.
The big gap in the meeting, however, was on the question of finances. Despite state CMs raising the issue of their depleted finances and the need for support, the PM did not provide a specific commitment. The government has already delayed a much-needed stimulus package for the economy, causing perhaps, irreversible harm to a range of businesses and industries. It is also now delaying the announcement of a support framework to states, which are spending more and earning much lesser than usual. This is unsustainable and will throw the entire framework of public finances into disarray. Still, a week of the lockdown remains. By the end of this period, India must have a plan on opening up — and another on shoring up state finances and reviving the economy.