Coronavirus Carnage in an Isolated India

By: Shehriar Rafi      Published: 07:35 PM, 12 Sep, 2020
Coronavirus Carnage in an Isolated India

“May you live in interesting times”, a phrase often attributed to an ancient Chinese curse feels strangely apt within the global environment we currently find ourselves hostage to. South Asia in particular finds itself at a curious juncture.

A rapidly changing world, far from the relative stability of the distant two decades long ‘Pax Americana’; was already in flux, with populist strongman leadership on the rise, a superpower that abruptly forsakes the global ‘rules-based’ system that the USA itself had setup (with all that entails) and disruptions to the established order caused by a rising China. The World did not need a global pandemic to make 2020 anymore “interesting” but when it rains it pours and here we are.

After the Coronavirus hit Pakistan in February, like most people, who were getting their news from epidemiologists such as Dr Anthony Fauci in the West and following statistical models from institutions like Imperial College I expected a complete catastrophe. If the mighty USA, with cities like New York; that alone had a health budget an order of magnitude greater than Pakistan’s was brought to its knees, what chance did we have, or so the conventional wisdom went.

And yet, mercifully, the Cataclysm did not come; whether it was Imran Khan’s patented “Smart Lockdowns” (phased, hotspot control), diversity of genetics, the prevalence of vaccinations, the hot and humid weather or Divine Intervention (everyone has their reasoning); the coronavirus had a much smaller impact than anticipated in the most optimistic of projections, but no one has a clue as to why. 

It is September, in Pakistan, life has returned to normal, more or less. As we await the “second wave”, Pakistan is upbeat, the stock market has become the best performer in Asia, Real Estate (and its associated industries) is witnessing a vibrant revival under Prime Minister Imran Khan’s generous construction package, interest rates are down, consumer spending is returning to normal and large infrastructure investments are incoming as CPEC Phase II is readying to take off. Imran Khan and his team should get the political credit they deserve, mocked for placing livelihoods over lives, in the end, they saved both; he was right and the intelligentsia was wrong. For the sceptics, let's call it a miracle and leave it at that.

Geographically, linguistically, culturally and historically, India has always served as a mirror for Pakistan. Being successor states to the British Raj, our institutions and people are similar enough that one would assume a similar fate awaits on the other side of the border. However, when viewed from Pakistan, what is happening in India right now is less akin to observing a mirror and more like staring into the Abyss. 

Last week, after becoming the second most coronavirus infected country, India’s Ministry of Statistics and Programme Implementation dropped a bombshell, The Indian GDP had contracted by an enormous 24% in the formal sector during the first financial quarter of 2020; according to economist Pranab Sen, the actual contraction could be as worse as 32%. Additionally, private consumption had fallen by 27% with unemployment rising to 23%; the official figures far outpaced the most pessimistic of expectations and has caused alarm across the country as well as with foreign investors abroad. Declared “An Act of God” by the ruling Bharatiya Junta Party (BJP) Government; Putting things into perspective, this is the worst economic performance of any major world economy and the Indian economy itself since the 1918 Spanish Flu. So what exactly happened?

Indian economic growth has been in steady decline since 2016. That year, PM Modi’s ill-thought-out and poorly executed signature policy of ‘Demonetization’ (also jeeringly termed “An Act of God” by West Bengal Finance Minister, Amit Mitra) decimated the informal sector, taking the air out of the economy's tires.

Former Chief Economic Adviser to the government of India, Dr. Arvind Subramanian had been warning since 2019 about inaction on structural reforms and fudged economic data causing impending economic challenges he termed “India's Great Slowdown”. Around this time, industries like Real Estate and Construction were highly leveraged, projects were being developed but demand had slumped; Fitch Ratings was warning about a multi-billion dollar default incoming from the sector alone around mid-2020, devastating Non-Banking Finance Corporations (NBFCs) and subsequently impacting allied lending institutions; other soft indicators such as the growth in production of electricity were all on the decline.

India had been treading on politically perilous ground. The populist, macho-chauvinist Hindutva ideology of the BJP has been eating at the very foundations of the Indian national idea (as defined by prominent politician Yagendra Yadev: democracy, diversity, development) and reforging it in its own world view. The abrogation of Article 370 on Kashmir, the terrorizing of minorities (particularly Muslims), the demonization of any dissent as ‘anti-national’, the state support of vigilante cow protection squads, the proliferation of the false ‘love jihad’ narrative and jingoistic hyper-nationalist media are just a few of the many divisive elements that manifested in the latest tenure of the Modi government. 

What about the courts? I hear you ask if the legal gymnastics in the Supreme Court verdict on Ayodhya wasn't enough for you; take the recent example of prominent lawyer Prashant Bhushan, who suffered a serious contempt of court case on fickle grounds regarding his opinion in a tweet. Prashant has also been criticising the judiciary about its total lack of interest in hearing any Public Interest legislation against the government's heavy-handedness. Ironically,

The Supreme Court could not find time for a hearing on Article 370 or the myriad of habeas corpus cases however amongst the rampage of the coronavirus, Prashant Bhushan was tried immediately for an innocent comment regarding the Chief Justice riding maskless on his flashy Motorbike.

In this tinderbox, entered the coronavirus pandemic; on a recent TV programme former Chief Economist at the World Bank Kaushik Basu observed that the impact on an economy was directly related to the severity of the lockdown it endured. In sharp contrast to Imran Khan, on the 21st of March, Modi reacted with what was perhaps the strictest nationwide lockdown in the world. The strategy had one critical flaw; the lockdown did not cater to poor daily labourers who suddenly found themselves without employment, shelter or transport. These destitute abandoned masses walked hundreds of miles cross country, in their millions, with their children on their backs and a few belongings in tow, trudging towards their respective villages. In Mr Basu's opinion, Modi froze the economy and spread the germs. As a result of this haphazard planning more than half of the daily 80,000 new coronavirus cases are now in India's wide-spread rural areas.

More lasting than the health tragedy is the havoc COVID-19 is playing on India's economy; After the initial lockdown, rather than taking charge and formulating a unified national response as observed in Pakistan, India’s Central Government threw the responsibility upon the shoulders of the constituent states of the Indian Union, which in turn started implementing sporadic, disjointed and haphazard lockdowns (3 days a week or weekends), proving neither to slow the virus nor benefit the economy the states have burnt a hole in their coffers, and are now unsuccessfully demanding their share of the much-touted Goods and Services Tax (GST) from the Center (which holds the funds in trust), leading to much internal friction.

It will take at least 3 years for the economy to recover and Modi’s promise of a $5 trillion economy by 2024 is dead. Modi’s massive $250 billion stimulus package dubbed ‘Atmanirbhar Bharat’ (self-reliant India) which experts believe has to be executed perfectly to have anything close to the desired effect is yet to bear fruit. Tragically, the poorest and most vulnerable have likely exhausted all savings on survival and even when income does pick up, it will go towards replenishing savings or debt finance and hence will not contribute to demand.

Surely, Modi will pay a political price for all this? Well not likely, according to a Morning Consult poll as of May 19th his approval rating was 82% (a rating any self-respecting politician would trade 2 limbs and a kidney for). The problem for India is that Modi is no mere political leader but has transcended into a spiritual icon. He has become the symbol of a new India, the embodiment and expression of a revitalised Hindu identity and newfound hyper-nationalist pride of the majority. Facts and truth are open for interpretation and history may be rewritten to suit the party line; this is dangerous for India and for Modi; a leader that doesn't pay the price for his mistakes is soon surrounded by pliant sycophants and an echo-chamber of approval; lacking the critical feedback one needs to make course corrections.

Abroad; unlike the international outreach witnessed in its first term; the BJP’s internal political compulsions, the demonization of all things Pakistan, insulting Muslim Bengali citizens as “termites”, blockade-bullying Nepal, and a complicated relationship with Sri Lanka, have left New Delhi completely isolated within the Sub-Continent. Although ties with the USA are better than ever; India is now actively engaged in hostilities with a very dominating China; Beijing has wasted no opportunity to expand into what was considered New Delhi's Sphere of Influence; even Iran, traditionally friendly with New Delhi has expressed considerable annoyance, even terminating Indian involvement in the much-touted Chabahar port (previously a potential competitor to CPEC’s Crown Jewel: Gwadar Port). 

Tragic as all this is, amongst all the chaos perhaps lies an opportunity; a humbled and overwhelmed India might be willing to seek a working relationship with Pakistan to lessen the immense pressure it is feeling at this moment. Some form of economic, diplomatic and trade normalization would benefit the only thing that should matter for both: the lives and livelihoods of the people of the subcontinent. 

  The Writer is CEO of Rafi Group, President Jinnah Rafi Foundation & holds an MBA from EDHEC Business School

Categories : Opinion