New Delhi: Relaxing the lockdown too early could risk a resurgence in Covid-19 cases in India and force a need to extend the lockdown again, even as the government has opened up a larger share of the economy to mitigate costs.
A report titled “Tiptoeing around Covid-19 to get back to work” by Nomura said the government has opened up a larger share of the economy to mitigate the lockdown costs. “However, this may risk a resurgence in cases,” Nomura said in the report.
India’s decision to partially relax the lockdown highlights the growing trade-off faced by developing countries of the economic costs of a lockdown versus health.
The report said that outside of the administrative challenges in dealing with partial relaxations, relaxing the lockdowns too early could risk a resurgence in cases and a need to extend the lockdowns again.
“Hence, the sustainability of the growth recovery hereon will not only be contingent on how quick the reboot is, but how successfully the epidemic curve flattens,” according to the report authored by Sonal Varma and Aurodeep Nandi.
The decision to relax restrictions in rural areas is aimed at maximising activity as the rural areas currently have lower infection cases.
“However, policies will need to be nimble because infection rates could resurge,” the report said.
India is currently nearing 13,000 Covid-19 cases and the top five states with the largest number of cases — Maharashtra, Delhi, Tamil Nadu, Madhya Pradesh and Rajasthan — account for 63 per cent of the total cases in the country.
The daily new cases have risen at a rate of 10 per cent day-on-day in the past seven-day average, although it has moderated below 10 per cent in the last two days.
“Relaxing the lockdowns too early could risk a resurgence in cases and a need to extend the lockdowns again. Hence, while the economy is being partly opened up, we need to closely monitor how the epidemic curve pans out as that will determine the durability of economic activity,” Nomura said.
“We are also concerned how the rollout of a partial lockdown will be implemented, as monitoring of movements of people and industries will require considerable administrative strength.
“Some of the exempted districts may be producing input goods, while some of those shut down could be consuming finished goods — so an additional challenge will be the sustainability of the lockdown as pressures emerge on connecting the supply side of the economy to the demand side,” the report said.
Nomura estimates suggest that the partial relaxation will open up a larger share of the economy. Compared to the original lockdown, in which only 25 per cent of the economy was operational, these relaxations can result in roughly 45 per cent of the economy resuming business after April 20.
Estimates assume that the hotspots’ districts, which account for over 37 per cent of the national GDP, will remain under lockdown.
Since India’s national lockdown started on March 24 midnight, activity in roughly 75 per cent of the economy has been adversely affected, while essential activities in the remaining roughly 22 per cent of the economy have been operational. The new guidelines will widen the scope of activities that can now operate (after 20 April). (IANS)