Covid-19: Top economist says India might face ‘serious livelihood crisis’

India might be heading in the direction of a “serious livelihood crisis” because the state of affairs appears to be worse this time for the working class amid the COVID disaster and native restrictions by states already add as much as one thing near a nationwide lockdown, in response to famous economist Jean Dreze.

In an interview, he additionally stated the federal government’s goal to make India a USD 5 trillion economic system by 2024-25 was by no means a “feasible target” and was simply to pander to the “super-power ambitions” of the Indian elite.

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About the influence of the second wave of COVID on the Indian economic system, the eminent economist stated the state of affairs as we speak just isn’t very totally different from what it was round this time final yr so far as working persons are involved.

“The economic consequences of local lockdowns may not be as destructive as those of a national lockdown. But in some respects, things are worse this time for the working class,” he opined.

Further, the eminent economist stated the concern of an infection is extra widespread and that can make it arduous to revive financial exercise.

“Despite mass vaccination, there is a serious possibility that intermittent crises will continue for a long time, perhaps years. Compared with last year, many people have depleted savings and larger debts. Those who borrowed their way through last year’s crisis may not be able to do it again this time,” he noticed.


Dreze additionally identified that final yr there was a reduction bundle and as we speak reduction measures are usually not even being mentioned.

“On top of all this, local lockdowns may give way to a national lockdown relatively soon. In fact, they already add up to something close to a country-wide lockdown. In short, we are heading towards a serious livelihood crisis,” he stated.

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On how the federal government might have missed seeing the second COVID-19 wave coming, Dreze stated the Indian authorities has been in denial all alongside.

“Remember, the government refused to admit about any ”community transmission” of COVID for a long time, even as recorded cases were counted in millions. When an early analysis of official data exposed the collapse of health services, the government retracted the data,” he said.

He pointed out that misleading statistics have been routinely invoked to reassure the public that all is well. “Denying a crisis is the surest way to make it worse. We are now paying the price of this complacency”.

India has been reporting greater than three lakh new COVID circumstances every day in current weeks and the loss of life toll as a result of an infection can be rising.


Noting that India is also paying the price of a long history of neglect of the health sector, especially public health, Dreze said nothing is more important than health for the quality of life, yet public expenditure on health in India has hovered around a measly 1 per cent of GDP for decades.

When asked about the sort of relief measures that could be put in place to deal with possible livelihood crisis, he said as a starter, the central government could replay the 2020 relief package.

“But you will need to transcend that, and to consolidate the social safety system on a sturdy foundation,” the eminent economist said, adding that ad-hoc, short-term relief measures tend to breed confusion, corruption and waste.

Dreze, who was also part of the National Advisory Council (NAC) that had advised the previous UPA government, said much can be done within the framework of existing social security schemes and laws such as the public distribution system, the National Rural Employment Guarantee Act (NREGA), the National Social Assistance Programme, and the Integrated Child Development Services.

Also Read | In Covid-hit India, 23 crore people earn less than Rs 375 per day: Study

He also noted it would be easy to provide supplementary food rations to all ration-card holders for much longer than the proposed two months, and also to expand the coverage of the public distribution system.

“Going past present schemes, I believe {that a} well-designed, inclusive cash-transfer programme can be helpful,” Dreze opined.

According to him, if intermittent crises are going to continue for years, which is very possible, it would really help to have a well-functioning system of cash relief that can be activated whenever the need arises.

“Turning India right into a USD 5 trillion economic system by 2024-25 was by no means a possible goal, and it’s a ineffective goal in any case. The operate of this goal is to pander to the super-power ambitions of the Indian elite,” the Belgian-born Indian economist said.

In 2019, Prime Minister Narendra Modi envisioned to make India a USD 5 trillion economy and global powerhouse by 2024-25. According to Dreze, even if we accept GDP as a valid development indicator, the standard approach is to look at GDP at its per capita terms.

“But then India seems to be like one of many poorer international locations on this planet, which it’s. Looking at combination GDP, which is of course fairly massive due to India’s massive inhabitants, creates an phantasm of prosperity and energy,” he argued.

Dreze pointed out that actually, it is not entirely an illusion because if the government’s interest is in power on the world stage rather than in the living conditions of the people, then, yes, aggregate GDP would matter.

“For occasion, it might allow you preserve a big military. But this has nothing to do with growth,” he noticed.

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