Be careful about allowing manufacturing to restart PDF Print E-mail
Wednesday, 01 April 2020 03:42
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The virus threat is far from over and there is little to suggest manufacturing won’t send it into another spiral


Given the economic hardship the 21-day corona lockdown is causing, and the plummeting of economic growth, it is not surprising that many are petitioning the government to allow manufacturing to restart with adequate safeguards such as social distancing; while the lockdown will end on April 15, manufacturers are worried the curbs on the sector can extend beyond that. Exporters have talked of how, if they are not allowed to resume manufacturing, China will get a head start since its factories have already resumed manufacturing. Some economists have also weighed in saying the economic costs are so large, the economic consequences could far outweigh the potential tragedy occurring due to the coronavirus. Indeed, one argument is that, should the shutting down of manufacturing carry on for long enough, India’s slowdown could well become a structural one since many of the units that shut down may never be able to come back on stream once the threat of the pandemic is over, in quite the same way that demonetisation dealt a lasting blow to many enterprises.

Large parts of these arguments could well be true and, certainly, it is not going to be possible for the central or state governments to provide relief to the crores of people who will lose jobs if the slowdown persists; indeed, if even some of the better-off firms have announced that they will stop purchases from suppliers, it is easy to imagine what the smaller firms in the unorganised sector will be going through. But, using this argument to allow manufacturing to restart is missing the point, of the need to counter a major pandemic that can, models suggest, infect 20-25% of all Indians.

Indeed, that was the reason for the Janata Curfew and the subsequent lockdown; don’t be fooled by the slow pace of the infections so far, the prime minister told the country, many other countries had a slow pace of infections initially, and then they just kept growing almost exponentially. And, if the health systems of rich countries are unable to cope with the disease, the PM stressed, what hope is there in a country like India where the health system is already severely strained? Indeed, while it was a hypothetical construct, solicitor general (SG) Tushar Mehta told the Supreme Court that three of 10 migrants could well be taking back the corona virus to the village if they are allowed to leave the cities; an SG shouldn’t be talking so loosely in the court since he is suggesting 30% of Indians are already infected, but it is a sign of how big the threat the government thinks India is faced with.

In such a situation, allowing manufacturing to restart is asking for trouble, and risks undoing all the good work India has done in flattening the curve by the lockdown. Indeed, if factories are allowed to restart, chances are the pandemic will only spread faster; and no matter what assurances India Inc may give, it is going to be impossible to do adequate social distancing in factories, except in highly automated ones. Instead of going down this path, the leading lights of India Inc, along with NGOs and the government, need to find ways to keep the MSME sector alive enough to pay workers their dues for at least a few months; this will include not just government action like paying money directly to workers and special lines of bank credit that are backstopped by the government, but also India Inc opening its purses to suppliers/ancillaries. Giving a few hundred crore of rupees in relief or offering to make ventilators or face-masks and protective gear for health workers is a good gesture, but that just doesn’t cut it.


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