The Central government faced with breakout of Coronavirus in the country and the possibility of the pandemic spreading in a country which is ill prepared to counter the task in terms of healthcare facilities announced the lockdown on March 24, with just a four-hour notice which made it even harder for the people to figure out ways to combat the challenge. After six weeks of national lockdown now the attention is back on restarting the economy which was functioning at almost 50% of its capacity all these days. Efforts to bring the economy back to normalcy have led to some startling revelations.
Different regions, different skillsets
Our economists, by now, must have realised that switching on the economy after prolonged lockdown is not as easy as switching on the home ACs after extended winter. India is not only a vast country with each region having a diverse culture but also with diverse skillsets. For example, in Ahmedabad – tribal migrants from Madhya Pradesh and Rajasthan form the construction workforce; seasonal migrants from Bihar are head-loaders and cart pushers; migrants from Uttar Pradesh dominate as factory workers and drivers; Oriyas are mostly associated with plumbing work, and the diamond cutting industry is made up of people from Saurashtra.
Special case of truck drivers
Trucking operations (part of logistics industry), from an Indian perspective, can be said to be the lifeline of commerce and economic development and their significance may not erode significantly even after full development of railway freight corridors in the country. The inter-connectivity that trucking operations provide ensures reaching almost the entire country, mostly. There are nearly one crore truck drivers in the country and most of them come from just 14 districts of the country. In other words, outbreak of COVID-19 like diseases in these just 14 districts can bring the whole economy to its knees.
Migrant workers play dominant role
Migrant workers play a dominant role in Indian economy though their service mostly go unnoticed as they are highly unorganised and scattered. Seasonal migrants dominate the low-paying, hazardous and informal market jobs in key sectors in urban destinations, such as construction, hotel, textile, manufacturing, transportation, services, domestic work etc. Most of them belong to few districts in the country. More than four-fifths of these districts belonged to eight Indian states. Tamil Nadu and Karnataka in the south, Uttar Pradesh in the north, Jharkhand, Odisha, Bihar and West Bengal in the east and Assam in the northeast India are the major states of origin of migrant workers.
Unfortunately, these migrant workers are unorganised and are at the mercy of the contractors/middlemen. These middlemen have a huge influence in terms of controlling, mediating and recruitment of migrant workers. These contractors are responsible for wage payments as well as work supervision. In most cases, the contractor pays advance amount to workers before they reach the actual work destination which acts as a surety for the migrant worker and the amount and the percentage of advance varies across sector and skill level. Projects developers too prefer this kind of arrangement as this does away with any responsibility that comes with direct recruitment of informal workers in terms of minimum wages and related social security requirements.
However, COVID-19 and the lockdown might have changed all that. During lockdown the government directed that all the subsidies payable to migrant workers to be routed through bank accounts and this may eventually lead to formalisation of migrant workers.
Various regions are closely intertwined
Economy cannot be normalised unless all parts of the country become lockdown free as various regions of the economy are closely intertwined. To produce one meter of cloth in India, raw material, that is, raw cotton, comes from Western region, spinning of yarn is done in North and West, weaving of the yarn is done across the country, especially South and West and apparel is manufactured in clusters in the north and south. Thus, if any one cluster/region comes under containment zone the whole value chain will get disturbed. This has been the case with other products too. Further, most of the demand for the products come from the cities and as most of them are excluded from lockdown relaxation it will impact overall demand. An economic activity allowed in one part of the country or economy could be constrained by supply-and-demand bottlenecks in other parts.
Thus, restarting of the economy needs restoration of supply chains, demand centers, and labor corridors and the overall objective cannot be achieved just by starting factories. Lockdown needs be implemented strictly in containment zones, substantial relaxation of norms required at other places. We have to treat COVID-19 as any other disease and should learn to live with it, of course with necessary precautions.