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The Cost of Corona

The COVID 19 has exposed an inadequate health sector to untold pressures though the doctors and para medics are doing a valiant job. The healthcare in our country is the responsibility of the state governments. Not all of them are well to do. Inadequacies in provisioning healthcare can be disastrous. Since 2005, most of the healthcare capacity added has been in the private sector, or in partnership with the private sector. The private sector consists of 58% of the hospitals in the country, 29% of beds in hospitals, and 81% of doctors. Apart from the percentages what is critical is that we have 9.3 lakh doctors for more than a billion population. Another marker, the Markets that indicate the health of wealth in the country have spiralled down in an abyss. A Sensex that slid from 40,000 to 25000 in a matter of days has turned many a small and big business and their trader’s bankrupt. The government must step in like it did in pushing a lockdown to prevent the spread of the virus, else our entrepreneurs suffer sudden death. Promoters need to be enabled to buy own shares from the market with no tax implications to stabilise the stock market. This stock market rout can have a cascading effect on banking too.

 

The 6th March ‘Bloomberg Economics’ reports that the economic fallout could include recessions in the U.S., euro-area and Japan, the slowest growth on record in China, and a total of $2.7 trillion in lost output, equivalent to the entire GDP of the U.K What if South Korea, Italy, Japan, France and Germany all the major economies other than China that have seen the most virus cases take a hit on their economy as well? The report further puts the global growth for 2020 down by 3.1%. Scary metrics indeed.

 

All this has a profound take for India. Our straight thinking must be disrupted to provide solace, lest we are forced to declare an economic pandemic. That the government allowed a delayed tax & GST payment by companies and allowed them time till 30th June is laudable.

 

A country in lockdown for three weeks and effectively could be many more, brings several concerns in its wake. First, living in isolation is difficult, because humans are social creatures. Secondly, fear and anxiety can take a toll on both young and the old. The young fear losing a living. The old fear emptiness and a lack of purpose. A research published in the American Journal of Epidemiology, reports that there is robust evidence that social isolation and loneliness significantly increase risk for premature mortality, and the magnitude of the risk exceeds that of many leading health indicators. It further shows that the magnitude of risk presented by social isolation is very similar in magnitude to that of obesity, smoking, lack of access to care and physical inactivity. It is also possible that both, those in isolation ward and those confined to homes, are more likely to feel depressed and may have problems processing information. This in turn can lead to difficulties with decision-making and memory storage and recall. They are also susceptible to illness. Researchers found that a lonely person’s immune system responds differently to fighting viruses, making them more likely to develop new illness. 1.3 billion people confined to homes for almost a month can create a new dimension of a yet unfolding problem for both the health workers and the government. Doctors treating for a variety of psychosomatic disorders on one hand and the government to fend for a large population that no longer can afford to make ends meet on the other.

 

A Crisil report and the India wage report of the ILO echo several labour concerns. As revenue streams of firms get impacted, employment, particularly of daily wagers and temporary workers, will be in the firing line. Anecdotal evidence suggests hit to services such as restaurants, transport, including air and ground, entertainment / film industry, tours and travel, retailing and sports events, which intensify as the crisis worsens leading to prolonged lockdowns. Be that as it may, the logistics of providing the daily necessities to every individual in a virtual lockdown, will be a nightmare for any administration. That this must be done, after protecting the health of workers involved in various supply chains against a contagion in the air as vicious as the COVID 19, must be doubly difficult. A mitigation effort then becomes equally important.

 

Can a deposit of Rs.5000 in each of the ‘Jan-Dhan’ accounts be made to compensate for loss of employment? The 298 million accounts would mean about 1.50 lac crores. Can all payments owed by government to all companies be released early? Can all tax refund cases be processed early? This would mean more cash in companies’ hands to handle the crisis. May be the government can draw a loan against delayed tax receipts for it to run, which is far better than companies seeking loans from banks. Similarly, deferral of EMI and loan repayment by 6 months could apply a little balm. Can the NPA norms of banks be changed so that it doesn’t hurt their balance sheets? Can a onetime exemption on all forms of tax on income for salaries paid in March, April and May be made for companies that aren’t retrenching any staff or daily wagers? In these stressed times, Health and Life insurance must have zero taxes. We save almost Rs.45000 crores each month on crude oil price fall. Can we convert this into a fund that can be used to fight the current Corona Crisis and later to establish medical and health facilities? The education sector is in deep turmoil exacerbated by the current malady. Can we have zero tax on all expenditure incurred on education & health institutions? This will also bring down the cost of education, life and health services in the country.

 

Incidentally, SARS coronavirus identified in 2003 also an animal virus, that spread to other animals and first infected humans in the Guangdong province of southern China in 2002 was more contagious than the present virus. Scientists argue that more contagious the virus, lesser is the mortality rate, which simply means that viruses which are highly contagious are less deadly. The mortality rate for coronavirus as per a CIDRAP report is 2.3% while for SARS, it was a whopping 9.6%. Should we see this as light at the end of the tunnel, in these highly stressed times?

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