Economists Dr. Javaid Iqbal and Dhaar Mehak present a timely short paper that articulates relevant questions about striking a balance between strategically resumed "economic activity" in its relation to "labour mobility." In doing so, the two academics provide feasible strategies and approaches that could keep India from receding into an economic collapse.
As a huge reallocation of roles is taking place across the economy, governments have the health factor as their prime area of focus. Officials have been assigned and re-assigned to emergency duties in order to ensure that (a) people stay indoors till the incubation period of the virus is over, (b) suspected individuals are isolated and sent to quarantine centres, (c) essential services are provided to people at their doorstep, and (d) food security is ensured to the vulnerable. The major burden of this exercise is on the doctors and paramedic staff, civil administration and policing services, with the rest of the labour force advised to be indoors. However, such a state of affairs is unsustainable in a labour-surplus economy like India. With the majority of workers losing jobs across sectors, a huge job market crisis is becoming inevitable.
Migrant workers have started to pose a huge threat/challenge to both the efforts of the state to contain the spread of the virus as well as to the provisioning of food and shelter, as the now-unemployed urban poor march to their villages from major Indian cities. In the present scenario, the flattening of the COVID-19 curve is indeed of utmost importance, but economic activity of one sort or the other needs to be carried out simultaneously. The question, however, arises: how can such a fine and delicate balance be maintained while undertaking an(y) economic activity that would involve exposure to the pandemic?
In a recent article by M We intend to evaluate the feasibility of reviving economic activities in India amid efforts towards containing the pandemic. The preconditions for ensuring labour mobility and economic activity include the baseline exercise of assessing the impact and incidence of the pandemic across well-defined commuting zones for the labour. This is to say that the local labour markets can be identified that can begin/ resume work after confirming the decline/end of pandemic in the marked radius. This area, in essence, would be a closed economic zone insulated from the areas/zones where the pandemic is still active. This can be Step I in pushing labour mobility back on track.
It is now established that the pandemic mostly affects the vulnerable section of the population, including kids, the elderly and the unwell. These sections of the society, otherwise as well, are more or less the dependent population. It is but a coincidence that the working age population, i.e. the youth, is comparatively immune to the disease. They require the least amount of healthcare assistance. Morbidity rates among the youth, even in the worst hit countries, have been recorded at rates as low as 0.1%. Thus, it can safely be argued that the transitional strategy would advocate a gradual shifting of young people in the age group of 20-49 back to work. This, for now, would constitute a step towards economic normalcy and labour force mobility in an economy which is otherwise heading towards a halt.
Shifting of the young population to work sites has got to be incentivized to make it attractive as well as risk-neutral. Minimum realignment and recalibration of the existing infrastructure will be needed. This would include, for example, lodging the workers in a hotel, hostel or an accommodation facility inside or near the work areas. Hence, isolation and activity can co-exist. This process has to begin slowly, and with each passing day increase, till the economy returns to its normal and efficient levels.
As of now, advocating for the resumption of normal economic activity during a pandemic will invite a backlash both from policy circles and the general public. This issue is aggravated by an information bias. However, we do not know for how long the pandemic will actually stay with us. An economy of India’s size and structure cannot lock down for long without a medical breakthrough in the offing. The only way out is to strive for a fine balance between flattening the pandemic curve and pushing the economic activity curve to possible safe limits.
This gives rise to a fundamental question: what kind of production/services need to be started? There cannot be any random answers or guesstimates. A response to this question has to be derived based upon logistics management, cost-benefit analysis, input-output tables and the analysis of production tables. This would precisely lead us to the celebrated butter-gun trade-off: what commodities should be produced first and what should be left for later. Production networks are run by millions of firms and entrepreneurs, and the decisions related to production, distribution and delivery were taken care of by the market in the pre-COVID-19 era. Now, it is essential that the market is nursed by the government for the time being. This is a serious preposition, especially for a world which has championed laissez-faire over the last half a century. Currently, the global dispensation has arrived at a point where the government has to make policies that maintain the basic survival of all the people in the country and at the same time prevent an economic collapse.
About the Authors
The authors are affiliated with the Department of Economics, University of Kashmir. They can be reached at dhaarmehak[at]gmail.com.
Dr. Javaid Iqbal
Dr. Javaid is a senior Assistant Professor in the Department of Economics, University of Kashmir. He specializes in Labour and Conflict Economics and has recently published a book with Sage.
Senior Research Fellow
Dhaar Mehak is a Senior Research Fellow affiliated to the same department and working closely with Dr. Javaid. She is researching on Conflict Economics and has an interest in the study of the impact of shocks on micro-level enterprises.