This is not difficult as the government has a list of all registered and unregistered factories, and based on industry classification it can segregate those units that are exempt from those that are not.
The world is always in awe of how the Kumbh Mela, which involves millions of people and is organised in a non-metro city, moves seamlessly without a hitch, and rarely do we come across mishaps. However, when it comes to economic announcements, the approach is more of what is called ‘jugaad’, where we decide to go ahead with a certain dictum and then hope things get ironed out. It happened a little over three years ago, when we went in for demonetisation, where the public was assured cash would be available in 48 hours, but it took over two months to come close to 50% normal. The same holds for the shutdown, which has rightly been announced. It had to be done to ensure we mitigate the damage that could be caused by not having such a diktat. But considering it was known at the beginning of the month that it was only a matter of time before we could be forced to take such a measure, a contingency plan could have been in place. While it is true that it is easier to be wise post the event, there are lessons to be learnt that can form a template for future actions.
A major hurdle has been communication and the fact that we have a federal structure means that what is announced by the PM takes time to get absorbed, as the process of osmosis is slow. States and local bodies have their own interpretation of what has been said at the top, and hence while the common man hears the PM and feels assured that essential commodities will be available, the reality is shops are shut, goods don’t move, and transporters are stopped and even thrashed by the cops. This is because the communication is not clear and, ideally, such statements should be simultaneously sent to all states, which, in turn, should pass it on immediately to local authorities, of which the police force is the most important.
The police is rarely empathetic because when the business is dealing with wrongs in society and not ‘rights’, the thinking capacity is constricted. A curfew means that anyone on the road needs to be thrashed, and unless told clearly of what is exempt, would deal with the situation as they would when such an imposition takes place, which, historically, is a riot. Therefore, for five days post the PM making the announcement of which essential services are exempt, at the ground level ambiguity remains. The lesson is, post an announcement at the national level, all other authorities have to assemble and use internal channels to pass on such information so that life remains normal, with the only ban being on movement.
The second part of the story is that there is always the need to plan in advance as to how a shutdown is to take place. This is not difficult as the government has a list of all registered and unregistered factories, and based on industry classification it can segregate those units that are exempt from those that are not. The problem is that with all production units closing down, while delivery is gradually being taken care of, new output is not coming in, including products like vegetable oils, spices, soap, toothpaste, packaged foods, etc. Factories have been closed and even if they are open, due to varied interpretation, employees are unable to reach their place of work. With Mumbai and Delhi having challenges of including neighbouring territories as part of the metropolis, stoppage of vehicles creates more confusion as there are restrictions on crossing over districts that adjoin major cities. At the police check post it is easy to convince the authority that you are working at a bank than in an FMCG company (which have been allowed to work with limited staff).
Therefore, such lists along with requisite passes should have been ready and distributed to the concerned units that are allowed to function to eschew disruptions. A shutdown is aimed at forcing people to stay away from one another, and not to create scarcity in the market. An example is that while the emphasis is on e-commerce being used widely, the business is not just about delivering goods in a truck, but also packaging material including labels, courier service (if not having own link), hiring vehicles, etc. This should also be coming in the list of exempt industries, or else there would be major supply disruptions due to absence of production and distribution once the existing stock gets exhausted. Such scarcities are self-reinforcing and lead to high level of hoarding.
One can hope that these issues are sorted out over the next couple of days because the journey is long. While the shutdown is for 21 days, there would be extensions depending on how the virus has spread. It is too early to take an informed guess, just like it is hard to say how the economy would be impacted. Therefore, if such a sketch is not in place, it should be prepared and disseminated widely given that the country is well-linked through technology and messaging is easy.
Different countries have interpreted lockdowns according to their judgements. Ours is an extreme case like in some European countries where people are not to step outside except for buying essentials. Production is bound to be impacted as virtually 80% of the goods produced in the country cannot be considered as essential. But the balance has to be kept flowing in, in normal quantities, to eschew unnecessary hoarding. Also, as all food products have their origins with farmers, any embargo impacts their sales and income, which has to be protected for sure.
The author is chief economist, CARE Ratings. Views are personal