The Centre for Public Policy Research (CPPR) organised a webinar on ‘Securing Livelihoods during COVID’ with a special focus on Kerala’s economy and drawing lessons from previous pandemics. The topic was chosen prudently to capture the current and dire situation of India’s informal and formal workforce whose livelihoods have been hit hard by the COVID-19 crisis and the subsequent nationwide lockdown. A discussion session between Dr D Dhanuraj, Chairman, CPPR and Dr Martin Patrick, Chief Economist, CPPR was followed by Questions and Answers.
100 Years of Pandemics
The discussion started off with a brief account by Dr Martin of the previous pandemics that shaped the world order and economy. Citing the H1N1 flu pandemic that occurred in the year 2009 and cost about 2 lakh lives worldwide, he said that historical data no longer supports the commonplace notion that “pandemics occur every 100 years”. The Spanish flu of 1918 cost around 10 crore lives globally, taking 18 million lives in India alone, and cost 0.6 per cent of the global income. According to him, it is premature to project the fall in GDP due to the COVID-19 pandemic as India is only experiencing the first wave of the outbreak and yet to face the second and third wave.
Impact on the National Economy
The discussion progressed to assessing the ramifications of the crisis on both the national and Kerala economy. According to Dr Dhanuraj, the US$ 5 trillion dollar economy is a far-off dream for India. The country is losing an estimated Rs 35,000 crore daily since the lockdown was initiated on March 24. Despite 300 districts not reporting a single COVID case, most of the urban areas remain badly affected. In his opinion, as long as cities like Mumbai, Chennai and Delhi—which are the economic engines of India’s economy—remain affected, economic growth will not resume quickly. Due to the increased integration of the world economy, India cannot hope to get back on track until the Middle East, the US, Europe and China regain some normalcy. He said that the economic repercussions of the lockdown and the new norm of social distancing might also lead to a possible structural change substituting humans with machines. Dr Martin stated that it is time the government releases money to inject into the economy.
According to Dr Martin, Kerala’s economy will not be able to stay on the trajectory of 7.5 per cent growth rate this year. The State is heavily dependent on remittances from abroad and is driven by the service sector. Due to the current lockdown, goods and services are not being produced and as a result the households are not bringing in steady incomes. Being a consumer state, this is likely to take a heavy toll on Kerala’s economy. According to him, the percentage of people working in the informal sector in the State is high. Moreover, estimation of these numbers at the State level is a herculean task. He also emphasised on the micro and small enterprises (MSMEs) and their issues of lack of working capital and loss of income. He further stressed that the State Government should develop an economic package to compensate them for their losses due to the crisis.
Tourism, Health and Education
Dr Dhanuraj highlighted that Kerala gets around 1 crore tourists on average each year, but 80 per cent of these tourists are domestic tourists. If Kerala aims to boost its tourism sector— which has not been performing well for the past three years due to two cyclones, the Nipah virus outbreak, floods and COVID-19—then it has to focus on attracting tourists with a higher spending capacity even if the numbers are less. As the crisis persists, the hospitality sector will also face the consequences of migrant labourers returning to their native states.
He said that the response of the health sector in tackling the crisis is admirable. He also noted that there is an increase in foreign demand for nurses from Kerala and they account for a substantial portion of the State’s remittances. Dr Dhanuraj also emphasised that nursing homes and small-scale hospitals (1-20 beds) are likely to suffer if people believe these establishments are not secure and efficient in tackling the Coronavirus.
In the education sector, many aided and unaided institutions have made a smooth transition to e-learning and utilising digital solutions for teaching. As Kerala has a good Internet penetration and broadband connectivity, it will be easier for the educational institutions to embrace online learning in the near future. According to Dr Dhanuraj, this might also negatively impact the recruitment of teachers and professors.
According to Dr Martin, in the context of NRIs getting ready to return to their home states and the onset of a reverse migration, there is a need to study the out-migration and in-migration trends to understand how the workforce will be re-structured. Among the 30-35 per cent of NRIs expected to return, most contribute their skills primarily to the education and health sectors abroad. Dr Dhanuraj highlighted that the State may not be able to replace the migrant workforce adequately as the returning NRIs are likely to be highly skilled workers.
Effect on Urbanisation and Other Issues
According to Dr Dhanuraj, if “work from home” is established as the new norm, it will completely transform the concept of urbanisation. With the people from the lower strata relying heavily on public transport for commuting to work and many being employed in the transportation sector, a possible change in public opinion on the safety of public transport will have a significant impact on the sector. If the informal section of the workforce—which is at the core of urbanisation—is affected by these developments, then a paradigm shift could be witnessed in the urbanisation narrative.
He also emphasised that India is experiencing deaths caused by hunger or poor healthcare, issues which were existent even before the current COVID crisis. He said that as researchers and policymakers, our focus should be directed towards resolving these issues too. Dr Dhanuraj also underlined the importance of conducting local-level research and stressed the need to have a balance between saving lives and livelihoods.
The report is prepared by Akanksha Borawake, Research Associate, CPPR-Centre for Comparative Studies with inputs from Angela Cicily Joseph, Research Associate, Centre for Comparative Studies.