Hundreds of thousands of migrant workers and scores of poor people were left in the lurch on the night of 24 March, when the prime minister Narendra Modi announced a 21-day lockdown to combat COVID-19. The lockdown, which began within four hours, forced migrant workers to leave urban dwellings and make their way back home, without any state assistance. It led to an almost-complete destruction of economic activity across the country, with trillions of rupees wiped out in a market crash.
On the second day of the lockdown, the union finance minister Nirmala Sitharaman announced a relief package of Rs 1.70 lakh crore under the Pradhan Mantri Garib Kalyan Yojana to provide the poor with food and funds in their bank accounts. Several experts have criticised the government for it. In a letter to the central and state governments, 635 people—including prominent academics, civil society activists, and policy analysts—appealed for a minimal set of emergency measures to deal with the crisis. According to them, the relief package of Rs 1.70 lakh crore is less than half the amount required to fulfil the minimal emergency-measures.
Among the people who endorsed the letter was Jean Drèze, an economist and activist who works as a visiting professor at Ranchi University. In a conversation with Kaushal Shroff, a staff writer at The Caravan, Drèze spoke about how in the coming days, access to food and earnings for poor people would rely on the functioning of our public-distribution system, which is under tremendous stress.
We do not know when the COVID-19 crisis will subside. It may last for months, even one year. Its economic impact will depend on how long the threat of the virus will last. In the best-case scenario, even if the health crisis subsides in a few weeks, the human costs will still be enormous but the economy may recover fairly quickly after that. If the crisis lasts much longer, with periodic lockdowns of varying intensity, the economy is likely to go downhill because there are going to be ripple effects. Businesses will go bankrupt. Then, banks will suffer because they will not be able to recover their loans and we may see a financial crisis. Meanwhile, health services will be overwhelmed, and perhaps other essential services too. It is a pretty frightening situation, both economically and in terms of the humanitarian impact.
Socially, all kinds of pathologies may develop if the crisis lasts. For instance, as people get scared, residential colonies will barricade themselves, expel persons suspected of infection, or there may be food riots—all kinds of things. Let’s hope that it does not go on for too long.
In the short term, a lot depends on whether the public-distribution system continues to function. The PDS can prevent hunger to a large extent, but it is under tremendous stress. The system does not function in a vacuum, it depends on the rest of the economy to keep the food moving. If the food is to move, you need transport, communications, spare parts, oversight, a working administration and so on. It is going to be difficult to ensure that the system delivers adequately in this situation.