Covid-19: Government should extend the lockdown for another five weeks

Coronavirus lockdown
The government should cut the number of gazetted holidays and announce 6-day working weeks for the rest of the financial year.

(This article is the first of a four-part series on a viable strategy for India against the economic impact of the new coronavirus outbreak. Follow Policy Circle for the the rest of the series.)

There is widespread concern about the impact of the nationwide lockdown announced to tackle the new coronavirus outbreak. Economic activity has come to a standstill and there is no clarity about the length and viability of the lockdown. What is the best course of action for India in possibly the most severe economic emergency since independence?

Human resources are the most important input for economic growth in any country. India is blessed with a young population and it should do everything possible to preserve this wealth. Because of the demographic dividend, India is better placed to rebuild the economy ravaged by Covid-19 outbreak. The country’s young population can also serve be a reservoir of labour force for the entire world, which is ageing at a fast pace. While the Indians serving abroad will add to the GDP of the host countries and keep the engines moving, remittances to India will boost growth of the domestic economy.

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The government should extend the lockdown until medical experts feel that they have flattened the curve of the coronavirus outbreak. I would recommend the extension of the lockdown for eight straight weeks as empirical evidence from various countries suggests.

How about losses to the economy? What will happen to the three sectors of the economy – agriculture, industry and services? Agriculture is not impacted by the lockdown, but industrial production and services are certainly. In some cases, service industry is working from home too. Online classes in schools and colleges have also begun. In any case, normally, factories and businesses work for around 250 days a year. Once the pandemic is over, we can open factories even on weekends to recoup production losses. The weekends add up to 104 days a year. Our schools and colleges also close for summers, Dussehra, Diwali and Christmas. Our officials in the organized sector are entitled for one month leave along with leave travel allowances. These holidays are a sort of buffer available for recovering the lost output. The central and state governments have a long list of gazetted holidays.

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In the current year, the businesses, factories, manufacturing units, schools and colleges should be allowed to work on weekends and some of the stipulated holidays. After the lockdown is lifted, the government should cut the number of gazetted holidays and as a matter of principle, announce 6-day working week for the rest of the financial year, or even a 7-day week if businesses prefer that way.

India can ill afford to lift the lockdown prematurely, exposing its 130-crore people to the deadly virus infection. What is unfolding is a once-in-a-lifetime disaster that happens once in a century. The government and the businesses should come up with measured steps to cushion its impact once the virus threat has subsided.

(Dr Charan Sigh is a Delhi-based economist. He is the chief executive of EGROW Foundation, a Noida-based think tank.)

Charan Singh, Former RBI Chair Professor, IIM Bangalore
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Dr Charan Sigh is a Delhi-based economist. He is the chief executive of EGROW Foundation, a Noida-based think tank, and former Non Executive Chairman of Punjab & Sind Bank. He has served as RBI Chair professor at the Indian Institute of Management, Bangalore.