Coronavirus – Economic Issues

Lock, don’t shut

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Not much.

Mains level : Paper 2- Lockdown is not an end in itself, allowing the movements of goods and operations of industrial units should be considered.

Context

Economy is a living machine — cannot be simply turned off and on. Even in lockdown, it needs to be kept alive.

Movement of goods exempted

  • Essential and non-essential distinction removed: It is, welcome that the Centre has now exempted transportation of all goods from the lockdown’s provisions, without distinction of “essential” and “non-essential”.
  • When goods aren’t the culprit — it didn’t make sense, in any case, to allow bureaucrats and local authorities to decide what is essential and hold up trucks carrying material deemed non-essential.
  • One cannot expect officials or state border police to have intimate knowledge of production processes and inputs that go into every good, essential or otherwise.
  • The purpose of a lockdown is to minimise physical human interaction and maintain social distancing even if people have to meet.
  • Blocking movement of goods, far from achieving that objective, only results in overcrowding and snarls at check posts.

How allowing Industrial establishment to operate matters?

  • Allowing industrial establishment to operate: There’s no reason why even industrial establishments cannot be permitted to run during the lockdown.
  • Again, it shouldn’t matter whether these units are producing essential or non-essential goods. What matters is only social distancing.
  • Right step by the Punjab government: The Punjab government has taken the right step of permitting all factories in the state to resume operations, subject to their being able to provide in-house lodging, food and medical facilities to workers and ensure no overcrowding at the plant.
  • Mass exodus could have been avoided: Most factories today, whether in Punjab, Haryana and Delhi or Maharashtra, Gujarat and Tamil Nadu, are manned by migrant labourers from Bihar, Uttar Pradesh and other eastern states.
  • Had measures to retain this workforce within or close to the premises of factories been in place — instead of a blanket order to shut down — the current situation of a mass exodus of labourers and the attendant risk of COVID-19 transmission may have been avoided.
  • Difficulty in getting the labour back: It isn’t going to be easy for the closed units to get this labour back even when the lockdown ends.

Conclusion

  • The economy needs to be kept alive: An economy is ultimately a living machine — one that cannot simply be turned off and on. Even in lockdown, it needs to be kept alive and whirring.
  • Difficulty in resumption: The danger from mechanically ordered closure of activities is that resumption becomes difficult. Rebuilding broken supply chains is easier when things are allowed to run even if at low key so that the system can respond when demand returns.
  • Lockdown is not an end in itself: Combating COVID-19 should obviously be the government’s top priority now. Lockdown is a necessary part of that strategy, but cannot be an end in itself. It is necessary primarily for social distancing, which can also be achieved without bringing the wheels of commerce to a complete halt.
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