With no effective pharmacological intervention on the horizon, uncertain immunity to the Virus, and the exigencies of economic recovery, widespread testing is crucial
By Amartya Lahiri & Urjit R. Patel
There seems to be a plateau in the number of Covid tests per day that India aspires to—about 100,000. At this rate, close to two years would elapse before 5% of Indians are tested once. So, why is a country of 1.3 bn seemingly sanguine about the pace of testing when it has accepted one of the strictest lockdowns for two months, which means it has not underestimated the public health challenge? Or, why are countries with smaller populations trying to enhance their testing capacity from current levels? The US is aiming for a million daily tests. Germany already has walk-in test centres.
The main driver of increased Covid testing globally is the need to make people safe, and for them to feel safe, while engaging in market activities. This is fundamental to get the economy moving again. One might think that the necessity of earning a living will force people to report for work. But, decisions regarding market activity are not just about going to work. In normal times, people go for outings—to shop, dine out, and vacations. These actions sustain a whole ecosystem of businesses and livelihoods. As an example, the tourism and hospitality sector in India employs 40 mn workers—estimated to be about 10% of total employment.
Unless Indians begin to engage regularly with some of these activities, this component of the economy, and those whose livelihoods are derived from these sectors, can’t recover.
More generally, the virus has impacted activities involving interactions between people. Interactions occur both at work, and while consuming outside the home; the latter create their own business supply chain. As demand dries up in downstream consumption industries, businesses upstream, suppliers to the former, will shut down, too. This chain of broken links is what needs to be repaired quickly, for which a plausible requisite is making people more confident to engage in market activities.
It is, perhaps, a sign of our times that in the incessant cacophony, and consequent disappointment over fiscal and financial packages, relatively little discussion has occurred on the potential expenditure required for public health safety. To the best of our knowledge, little beyond the Rs 15,000 cr announced in March by the Centre for increased budgetary spending for the sector has been heard. Yet, without safety on the health front, the risk of a sharper and longer decline in economic activity stays elevated.It is, perhaps, not an exaggeration to surmise that global investment destinations will be influenced by the relative reputation of national testing protocols.
Ubiquitous testing is necessary for multiple reasons. The virus currently has no effective treatment, and a safe vaccine is possibly a year away; even recovery from infection doesn’t guarantee future immunity. There is uncertainty about the level and the longevity of immunity acquired through infection. This is at the heart of the necessity of multiple and regular testing of workers to protect workplaces, and impart confidence to co-workers that they will be safe. Hence, even the previously infected will have to continue to be tested. In addition, all tests have associated chances of false negative and false positive results—both errors are problematic.
So, how widespread must testing be, and how much will it cost? If one only targets urban workers in India, the testing pool is approximately 200 mn people. To make workplaces safe, at a minimum, every worker needs to be tested at least once every week over the next year, or till such time as a vaccine becomes available.
On a daily basis, this is around 21 tests per thousand people. By comparison, 100,000 daily tests imply a rate of only 0.08 per thousand people.
The cost of RT-PCR tests in India currently ranges between Rs 1,000 and Rs 2,500. This will undoubtedly decline going forward, as more private players enter the field and the government refrains from a licence-permit raj predilection. With scale economies and extensive pool testing, it may not be unreasonable to budget an average price of Rs 500 per test. The total outlay on this testing plan would amount to 2.5% of GDP. While not an amount to be sneezed at, this money can be found. The cost of having a comatose economy due to limited testing will possibly be higher than this.
Implementation of this strategy will require mobilisation on a war footing. The number of labs that can test for the virus will have to be increased to at least 2,000, with each lab having the capacity to test 5,000 samples a day. Moreover, labs need to be spread out across the country; presently, a third of all authorised testing labs are in three states. Another approach would be to incentivise private investment in point-of-care testing machines that give quick results and facilitate decentralisation.
Testing at this scale will also demand a quantum increase in supplies of components like swabs and reagents. These can be constraints. University labs in the US have developed alternative testing methods that don’t require reagents. India will have to incentivise its universities, research labs, and biomedical supply chains to join this mission to develop cheaper and faster testing methods.
The approach needs massive hiring of testers, transporters, and contact tracers. The resultant increase in demand for labour should provide jobs to the unemployed. Hence, it will provide employment insurance while simultaneously stimulating demand.
Ubiquitous testing will likely be a worldwide phenomenon over the next year or two, and world demand for testing kits will explode. If Indian businesses can respond to the challenge by quickly building capacity to produce relatively cheap testing kits, this could spark a boom in the biomedical industry. The pandemic could do for the biomedical industry what the Y2K scare did for the Indian IT sector. India needs to give an unambiguous signal to its entrepreneurs about the centrality of this mission. The skill and enterprise are both available.
Meeting the challenge could be a perfect launchpad for a global Make-in-India offering. We have already reached an analogous position in parts of the pharmaceutical industry. A bottom-of-the-pyramid virus testing product will be a game changer.
Lahiri is Royal Bank Professor of Economics, University of British Columbia & Patel is former Governor, RBI. Views are personal