Subway travel is up by 21 percent and domestic airline traffic is up by three percent in the last few days in China. Factories such as of carmakers have started production again. Today China is supplying medical equipment to large numbers of countries from its factories. No wonder, the United Nations Conference on Trade and Development (UNCTAD) has said that China will escape the looming recession of the world economy and India might just do so.
China’s savings rate is 47 percent, India’s is 30 percent while that of the other five countries is between 15 and 22 percent.
Know that China is not dependent on imports. Its economy, if at all, is dependent on exports.
We must retrace our steps and embrace import-substitution. Secondly we must try to increase our domestic savings rate instead of depending on foreign investment. We should create demand in the market by savings-led-investment instead of foreign borrowings-led-consumption.
We also need to understand why UNCTAD says that China will most certainly rebound?
The first step taken by them was to make available the kits for testing of Corona in sufficient numbers within three weeks. This made it possible to correctly identify and track the infected persons.
Finally, China allowed certain commercial establishments to reopen. However every worker in these establishments was given a QR code and was required to report his health condition every day.
We must implement these steps. First, the Government must ask the businesses to manufacture testing kits and protective gear and make them available not only to our health workers but also to export to other needy countries.
Second, the Government must create artificial borders around each state. The Government will face a dilemma on April 15th. The virus may spread if the lockdown is ended; while the people will go hungry if the lockdown is continued. The solution is to make an assessment of the spread of the virus in each state and allow those states to reopen where tracking is good and infections are less.
Lockdown must be continued in states like Maharashtra that have not been able to prevent people loitering on the streets. The entry into- and exit from such states must be permitted only after rigorous testing. This will make it possible for economic activity in certain states to rebound.
The third requirement is to test and track the infected. The Union- and State Governments must require all their employees in non-essential services like education, PWD and judiciary to report to the nearest Primary Health Centre immediately. These employees must be assigned to particular streets in the cities and to particular villages in the rural areas and required to test and track the infected. We have about two crore Government Servants of which, say, one crore can be deployed in this work. We have about 30 crore households. This means one Government Servant will be required to monitor a mere 30 households. They can easily visit these 30 households every day. Fourth the Government must make an official briefing every evening giving the correct status of Corona crisis to the people followed by state-wise briefings. Lastly, the Union Government must arrange to distribute food to the needy every day. If necessary the salaries and pensions of Government Servants may be cut by 50 percent to make available monies for this task. It is a grand anomaly that the served are dying while the servants are enjoying full pay sitting at home. These steps will make it possible for us to avoid economic recession in the times of Corona the possibility of which has been mentioned by UNCTAD.