The Making of a Catastrophe
In the government's response to the pandemic, Jayati Ghosh sees no redeeming feature; some will find her judgement harsh...
The coronavirus pandemic hit the world with unprecedented fury, starting sometime in early 2020 or even earlier. The world had not seen anything like it since the Spanish flu of 1918-20. More than two years on, we aren't quite sure we have seen the end of it.
India could not have expected to be exempt from the pandemic and it wasn't. The government responded with a complete lockdown in March 2020 which was lifted in phases, starting a few months later. India got away relatively lightly in the first phase compared to what the advanced economies went through.
It was in the second phase, which commenced around February 2021 that India felt the full fury of the pandemic. The health system proved unequal to the challenge, the death toll rose relentlessly and the government came in for severe criticism.
The two waves
Jayati Ghosh, a former professor at JNU, who is now with the University of Amherst, narrates how the pandemic played out in India against the general global setting in The Making of a Catastrophe. Much of the narrative is familiar enough but there is merit in bringing it all together in one place.
Ghosh sees no redeeming feature to the government's response to the pandemic. The people suffered and the economy stuttered to a halt. Others will find her judgement harsh.
To take the public health issue first, Ghosh thinks the nationwide lockdown of 2020, believed to be the most stringent in the world, was a tragic mistake. She argues that cases of COVID infection went up, nevertheless, so a complete lockdown was needlessly "brutal".
Well, we don't know. Things might have been worse but for the lockdown. Our health record in the first phase was better than that of many advanced economies, including many that did not opt for such a stringent lockdown. The Economic Survey of 2020-21 had mounted a solid defence of the government's approach. It would have been helpful had Ghosh attempted a point-by-point rebuttal.
The fact of the matter is that even the medical fraternity and public health experts knew very little about the virus when it first erupted, and, perhaps, don't know a great deal even now. A complete lockdown versus a partial one (or even none, as in parts of Scandinavia), masking versus not masking, being out in the open versus being indoors - all these were hotly debated and we got conflicting answers.
As for the second wave, Ghosh thinks the government was complacent and ill-prepared and that is why the pandemic took such a huge toll. Again, the intensity of the second wave caught even medical experts by surprise. (As a result, they kept issuing dire warnings until very recently, well after the indications were that the worst was over). Lockdown fatigue had set in. People had suffered loss of incomes and were eager to recoup these. There was a general sense that one had to take chances with the virus if one wanted to get on with life. Much of the criticism is strictly hindsight.
The economy was in bad shape even before the pandemic hit India. Ghosh believes the problems in the economy are rooted in the neo-liberal policies pursued by successive governments since the 2000s. Her diagnosis is peppered with sweeping statements and half-truths.
Ghosh writes that the "boom of the 2000s was related to financial deregulation... which sparked a retail credit boom". Well, India's economic growth in the boom period of 2004-08 was investment-driven. She says demonetisation had a "serious impact" on the economy. Incorrect. The evidence is that demonetisation shaved no more than 0.5% on an annual basis.
In 2014, the Modi government inherited the "twin-balance sheet" problem, a combination of excessive debt in companies and high non-performing loans at banks. This caused growth to slow down, resulting ultimately in the economy crawling at 3.7% in 2019-20. Then came the two waves of the pandemic in 2020-21 and 2021-22.
The government responded to the pandemic shock to the economy with a fiscal stimulus that was extremely modest compared with that in the advanced economies. Ghosh berates the government for its miserliness. The criticism is misplaced. The indications are that the combination of a modest fiscal stimulus and massive liquidity support has produced better outcomes than in other economies.
The Indian economy shrank by 6.6% in 2020-21 but bounded back to 8.7% in 2021-22. Inflation in India is under better control than in the advanced economies. That doesn't seem exactly like a story of policy bungling.
Ghosh writes with passion about the plight of the poor and the small-scale sector during the pandemic, segments that suffered the most during the pandemic. She concludes, "Doing nothing, or doing very little... are no longer viable options..." Alas, her prescriptions, such as more government spending backed by taxes on the rich, are unlikely to enthuse many.
Courtesy: THE HINDU