Business

Restarting India: The lives-versus-livelihoods debate is now getting louder

Updated : April 25, 2020 07:45 PM IST

Lock downs in countries such as India are so much more disastrous for human welfare and economies since there is no help for small businesses

The other challenge for the government will be the uniform implementation of rules across states after it decides to ease restrictions post-May 3

The government’s decision to partially open the lockdown for select industries from April 20 has turned out to be a non-starter. Never the one to mince words, Rajiv Bajaj may have spoken for India Inc as a whole when he slammed the government’s lockdown measures as ‘arbitrary’ and ‘draconian’.

“Lockdown is not the long term answer to the health crisis; the young and healthy need to go back to work,” Bajaj said in an interview to CNBC-TV18 some days back.

And he flagged an even more relevant point. “What is the point of producing when the dealerships are shut?,” he said.

It is a similar situation for all automobile companies. None of the automobile majors resumed operations this week, citing operational challenges. Major cement plants too stayed shut, citing weak demand and transport issues as the reasons.

Majority of the small and medium enterprises have chosen to stay shut, saying it was not possible to provide accommodation and transport for their workers, as mandated by the Home Ministry.

A few days after saying that it would keep the middle seat in every row of its aircraft vacant, GoAir backtracked, saying that it did not help maintain the necessary space for social distancing and was not commercially feasible as well. SpiceJet chairman Ajay Singh was more direct, saying vacant middle seats in aircraft to maintain social distancing was an “eyewash”. Market leader Indigo has been mum on the issue. Mathematically, if airlines reduce their capacity by one-third, then fares have to rise 50 percent to make up for the lost seats.

The government has not said anything on the issue so far, but then what happens when flights resume? Can airlines have a different set of rules on social distancing compared to other industries?

PVR Cinema’s CEO Ajay Bijli has said that multiplexes may have to reduce capacity to ensure more space between seats to maintain social distancing. But come to think of it, what’s the fun in watching a movie with loved ones or friends in a multiplex, sitting two feet apart. Like in aviation, ensuring social distancing in movie halls will mean having to shrink capacity. But unlike airlines, people won’t be flocking to cinema halls immediately after the lockdown lifts. So multiplexes have even less leeway to hike prices to compensate for the revenue loss. But will they be allowed to operate their halls as before in a post-COVID world?

These are some of the questions policy makers will be grappling with as the May 3 deadline for lifting the lockdown nears. Even in the US, there is a growing debate over the tradeoff between saving lives through lockdown and saving livelihoods even if that comes at the cost of more deaths. Already, around 22 million Americans have already lost their jobs over the past few weeks.

Back in India, the government has told businesses not to cut pay or fire employees during the lockdown, and warned them of action if they violated the rule. But enforcing it is not going to be easy. Many of the large corporations have already announced salary cuts with consent from their staff so as to stay within the law. But an overwhelming number of small businesses are not in a position to even pay salaries to their staff unless the firms themselves receive payment from their customers for the goods or services provided.

As Chris Wood of Jefferies writes in his newsletter Greed and Fear, “Lock downs in countries such as India and Indonesia are so much more disastrous for human welfare and economies since there is no help for small businesses being handed out, nor are there unemployment benefits.

Contrast this with America where the Small Business Administration’s Paycheck Protection Programme will provide up to $349 billion in forgivable loans to small businesses to pay their employees for eight weeks during the health crisis.”

Not every business is delivering its message to the government in the way which Rajiv Bajaj did. But the government needs to read between the lines.

Flipkart may have a point when it requested that that online firms be allowed to sell non-essential items as well as that would help small businesses. For now, e-commerce firms are only allowed to sell essential items.

“Ecommerce can also support in easing the burden of piled up inventory of MSMEs (micro, small, medium enterprises)and help in the delivery of these products to consumers in a safe and secure way while following the robust safety standard operating procedures,“ Flipkart said in a release.

The other challenge for the government will be the uniform implementation of rules across states after it decides to ease restrictions post-May 3.

Case in point is the repeated notifications and clarifications the Home Ministry had to issue asking states to allow movement of trucks after transport operators complained of harassment by local administrations. The situation is yet to fully return to normal.

Also, district administrations of states have the discretion to frame their own guidelines for easing of lockdowns without diluting those issued by the home ministry. And states can issue even stricter guidelines than those of the Home Ministry.

Five districts of Tamil Nadu are set to go into an “intense lockdown” from April 26 to April 29, given the rising number of COVID cases. But the administration could have planned it better. Social media was abuzz with pictures of people in these districts crowding the streets to stock up on provisions. That would have most likely undone a lot of gains achieved from the lockdown-forced quarantine over the last month.

The Centre as well as state governments’ overdrive to contain infections even at the cost of keeping the economy locked down is understandable. India’s medical infrastructure is woefully inadequate to deal with a surge in COVID patients. That is the case for nearly every country at this point, but more so for India which has less than one government hospital bed per 100 population.

And yet, the damage to the economy will have its own cost. It could manifest in other forms, social unrest being one.

There is no perfect answer to the questions staring almost every government in the world: how many lives can be sacrificed for that a larger section of the population is better off? India too needs to come up with its own answer.

Restarting India: The lives-versus-livelihoods debate is now getting louder

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