Coronavirus is ensuring the trade-off, especially for developing economies is significant, notwithstanding efforts to strike a balance
An op-ed article authored jointly by the heads of IMF and WHO earlier this month, described ‘save lives or save livelihoods’ as a ‘false dilemma’ (bit.ly/2y59Vj4), arguing that ‘getting the virus under control is a prerequisite to saving livelihoods’. The point is well taken. Unless lives are saved and preserved healthy, livelihoods become redundant. But, if lives and livelihoods were so distinct in priority, countries wouldn’t have been bothered by economic hardships caused by lockdowns.
Policymakers in large and populous countries like India are forced by coronavirus containment strategies to confront a double-edged narrative. The overarching public health perspective has been demanding hard containment and social distancing, implemented through economic and social lockdowns, for protecting lives.
These very measures, though, are creating economically catastrophic conditions. The catastrophic outcomes are magnifying and economic distress is no more manageable through temporary cash transfers, free food and loan repayment waivers. Apprehensions over what lies ahead are snowballing into paranoia over industries and businesses likely taking months to recover, prolonging joblessness. The implications, particularly for several small enterprises and marginal workers, are formidable challenges for economic survival, including penury.
For governments, the prospect of containment endangering more lives, than saving, is frightening. This is more so in countries like India, Indonesia, Nigeria, Vietnam, Pakistan, Brazil and even China. As countries with workforces comprising large informal workers, the livelihood concerns are extensive. ILO estimates (bit.ly/3bQZz4V) point to informal workers in these countries being heavily affected by lockdowns. In India, as much as in the other countries, job-intensive sectors with high presence of informal workers-construction, real estate, hospitality, tourism, wholesale and retail trade, transport-have been the hardest hit by economic shutdowns. Labour-intensive manufacturing with high proportions of informal workers like garments and chemicals have also been hit hard.
The threat of lockdowns aggravating economic hardships by an irreversible extent is scary for India–80% of workforce is informal. ILO apprehends, in India, as much as “…400 million workers in the informal economy are at risk of falling deeper into poverty during the crisis”. India’s lockdown has been among the most stringent in the world. As it enters its fifth week, the possibility of the lockdown pushing individuals and households on the brink, deeper into the economic precipice, looks real and imminent.
The lives vs livelihoods dilemma is different in OECD, and in high and high-middle income economies. These economies have greater economic and social capacities for ‘affording’ hard lockdowns. This is evident from the large sizes of stimulus packages. In the Asia-Pacific, financial support packages announced by Japan, Australia, Hong Kong, Singapore, as well as Malaysia and Thailand, are more than 10% of their GDPs. Germany, France, Spain and Italy have declared packages ranging from 15-30% of their GDPs. The US, the worst affected country in the world, has announced by far the largest-$2.2 trillion-package, which is about a tenth of its GDP, with more assistance to follow. These countries are aware of the large budgetary gaps the support packages would create. Nonetheless, they have still gone ahead and announced them due to the confidence in their economic and financial capacities for turning around the adverse budgetary conditions in the foreseeable future. Moreover, the social protection systems in most of these countries enable them to support people and businesses better during severe distress, like now.
India lacks such financial heft and social support systems in ‘balancing’ the economic downside of lockdowns. Persisting with the lockdown, notwithstanding the arguments for doing so, are going to be economically stressful for India, and many other countries facing similar prospects. Trading off livelihoods for lives might have been stretched to the maximum.
The urge to save lives motivated India’s central and state governments to marshal all resources at their command for implementing the national lockdown. They can’t be accused of succumbing to the ‘false dilemma’ mentioned earlier. Prolonging the lockdown would reflect their stated preference for favouring lives over livelihoods. However, as the governments hope for the rising tide of the pandemic to ebb, the humongous economic cost is also generating political costs. Sooner or later, elected governments in India, and elsewhere, would need to assess if the cost of economic hardships would overshadow the political benefit of saving lives.
The irony of the containment situation is that lives saved might not realise so if they are of people, who remained untouched by the virus but were economically destabilised by life-saving strategies. This creates the possibility of the good job that governments are trying to do, by pushing ahead on all fronts to save lives, earning them unpopularity and political losses. For the central and state governments in India, lacking in capacities to economically balance the lockdown, the ‘false dilemma’ no longer remains false. Instead, the trade-off becomes cruel and ugly.
The author is Senior research fellow and research lead (trade and economic policy), NUS. Views are personal