Should Australia take a leaf out of India’s book to handle economy amid COVID-19?

Back in November 2018, when Australian Prime Minister Scott Morrison and Indian Prime Minister Narendra Modi adopted the India Economic Strategy 2035 at Hotel Amora Jamison in Sydney, an excited Mr Morrison spent a considerable part of speech on his deep-rooted Indian connections. He fondly talked about how he loved to cook Indian chicken cuisines for his children every Saturday.

Pertinently, Mr Morrison needs his India connection right now, more than ever. And this time it won’t be needed on his culinary skills but his policymaking skills.

Many major cities in Australia are faced with a strong third wave of the COVID-19 pandemic. The number of daily cases is surging. On Saturday, Australia reported 915 cases. The pattern of these cases is worrying – 91% of the total cases, i.e, 830 came in as locally transmitted cases in a single state – New South Wales. A distant second in this game is state of Victoria. Ironically, as luck would have it, these two states house the two most economically significant cities in Australia – Sydney and Melbourne.

The response of Australian provincial governments was no different from that of others in the world. They resorted to various degrees of lockdown. The only problem with lockdowns is that it doesn’t stop the spread of the pandemic. What it essentially does is that it slows the spread of the virus, buying policymakers crucial time in which they can get the health infrastructure up and running. The only way to tame the virus is a combination of COVID-19 appropriate behaviour and vaccination. Lockdown was a solution, but only at the onset of the pandemic last year – after governments across the world had to ramp up the health infrastructure to deal with an unknown virus. This time around, there were enough warnings and evidence that COVID-19 would strike in form of waves – with peaks and troughs in between. So, the health infrastructure should have been ready.

But then, the lockdown seems to be only solution that policymakers come up with nowadays. This cripples the economy of the areas affected –severely impacting the economic activity. At times it leads to recession – like it happened last year. Now there are fears that, as major cities in Australia are under lockdown, the country may face back-to-back recessions in two years on the trot. This would mean more loss of jobs, more misery and more hardships – in short, more of bad things in life.

Governments seem to be taking the pandemic as a trade-off between lives and livelihoods – arguably a misplaced thought process on part of most of the governments.

But, in case of India, which was battered by a devastating wave of COVID-19 in April and May this year, things seem to different. The country was reporting between 200,000 to 400,000 infections daily – according to official handouts. But for the April to June quarter – when the country’s healthcare completely collapsed – the gross domestic product (GDP), which is slated to be released on coming Friday – is pegged to grow at anywhere between 14% to 23%. This is too impressive a number for the period when the country was gasping for oxygen. Compare that with Australia: with less than 1,000 cases a day, there is talk about recession already. While at 200,000 plus cases, India is talking about a mind-boggling growth number.

One logic would be the favourable base effect – when the denominator of GDP is very low However, since both countries were witness to a recession last year, the base effect should have benefitted both of them – albeit on a varied scale. So, what made the actual difference? The way the lockdowns were implemented. In case of India, many provincial governments avoided full lockdowns. Even if they went for lockdowns, they somehow managed to permit majority of the economic activity running. Most of the activities were allowed in the manufacturing sector. Additionally, India’s huge reliance on the services sector also helped it to implement work from home easily.

So, probably, the Australian government has a choice to make which is not an “either or or” option. It has to suffice for both lives as well as livelihoods. Can following the Indian model prove effective in finding a way out of this conundrum? Time will tell, but the government can’t ignore economy on account of saving lives.