Former Prime Minister Manmohan Singh said on Sunday that though a lockdown to limit the spread of the coronavirus appeared inevitable, it was carried out in haste, causing problems for people. He made the remarks in an email exchange with the BBC.
“...the government’s shock and awe approach to the lockdown has caused tremendous pain to people,” Singh said. “The suddenness of the announcement and the stringency of the lockdown were thoughtless and insensitive.” Singh said such public health emergencies can be dealt with efficiently by local administrators and public health officials, and added that the battle against the disease could have been devolved to the lower levels of government much sooner.
The Narendra Modi-led government imposed a complete lockdown in the country from March 25 to April 19, banning all except essential activities. From April 20, very limited economic activities were allowed to resume. In June, the government began the “Unlock 1” phase, slowly reopening the economy and devolving decision-making power to the states.
The former prime minister also said that a “prolonged economic slowdown was inevitable”. “This economic slowdown is caused by a humanitarian crisis,” he said. “It is important to view this from the prism of sentiments in our society than mere economic numbers and methods.” Singh added that Indian economists had reached a consensus that the economy would contract in 2020-’21 even in nominal terms, and hoped this consensus was wrong.
The Reserve Bank of India’s projections have shown that India’s Gross Domestic Product will contract in 2020-’21.
Singh said the 1991 economic crisis was the result of global factors. India had resorted to liberalisation of the economy in 1991 to overcome the balance of payments crisis. “But today’s economic situation is unprecedented in its ubiquity, scale and depth,” he said. Singh added that not even during World War II had the world shut down in such a synchronised manner.
‘Higher borrowing is inevitable’
Singh, an economist and finance minister of India during the 1991 crisis, said higher borrowing is inevitable in the coming months. “Even if we have to spend an additional 10% of the Gross Domestic Product to cater to the military, health and economic challenges, it must be done,” he said. The Congress leader said borrowing would increase India’s debt to GDP ratio, but if borrowing “can save lives, borders, restore livelihoods and boost economic growth, then its worth it”. However, he warned that the borrowed money must be used judiciously.
Singh said that unlike in the past, where borrowing from the World Bank and International Monetary Fund was seen as evidence of India’s weakness, the country can now borrow from a position of strength, compared to other developing countries. “India’s track record as a borrower from multilateral institutions is impeccable, It is not a sign of weakness to borrow from these institutions,” he said.
‘Do not impose high import barriers’
Singh warned against India aping other countries in imposing high trade barriers on imports. India’s trade policy since 1991 brought “enormous economic gains to not just the top but across all sections of our population”, he asserted. On August 9, India decided to ban the import of 101 defence items, an action Defence Minister Rajnath Singh described as a push towards self-reliance.
Singh said India’s economy is “10 times stronger” than it was in 1991, and the country has lifted 300 million people out of poverty since. But he added: “India is much more integrated with the rest of the world now. Hence, what happens in the global economy will have a significant impact on India’s economy. In this pandemic, the global economy is severely dented and that will be a big cause of concern for India.”