Analysis of COVID 19 impact on lives and its implications – Strategies to fast track back to prosperity through Smart Governance

By Dr. Sanjay Pattiwar

Ex. Add. Commissioner, Navi Mumbai Municipal Corporation (NMMC),

National Level Monitor, Health Mission NHSRC, Government of India, New Delhi.

Consultant, Tata Trust Mumbai

and

By Dr. P. Sekhar,

Chairman of Global Smart Cities Panel,

Micro Tech Global Foundation

Introduction

We are facing a global health crisis unlike any in the 75-year history of the United Nations — one that is killing people, spreading human suffering, and upending people’s lives.  But this is much more than a health crisis. It is a human, economic and social crisis.  The Novel corona virus disease (COVID-19), which has been characterized as a pandemic by the World Health Organization (WHO), is attacking societies at their core. Through these article strategies to fast track the impact of COVID 19 back to growth and development through the Doctrine of Secured Governance.

Since the COVID-19 outbreak was first diagnosed, it has spread to over 190 countries in the world.  The pandemic is having a noticeable impact on global economic growth. Estimates so far indicate the virus could trim global economic growth by as much as 2.0% per month if current conditions persist. Global trade could also fall by 13% to 32%, depending on the depth and extent of the global economic downturn.

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After understanding the magnitude of the attack which is rightly called World War III all authorities first saving humans and are engaging in an on-going series of interventions in financial markets and national governments are announcing spending initiatives to stimulate their economies.  International organizations are also taking steps to provide loans and other financial assistance to countries in need.  These and other actions have been labelled “unprecedented,” a term that has been used frequently to describe the pandemic and the policy responses. 

The International Monetary Fund (IMF) estimated that government spending and revenue measures to sustain economic activity adopted through mid-April 2020 amounted to US$3.3 trillion and that loans, equity injections and guarantees totalled an additional US$4.5 trillion.  As a result, the IMF estimates that the increase in borrowing by governments globally will rise from 3.7% of global gross domestic product (GDP) in 2019 to 9.9% in 2020, as indicated in below image.

Among developed economies, the fiscal balance to GDP ratio is projected to rise from 3.0% in 2019 to 10.7% in 2020; the ratio for the United States is projected to rise from 5.8% to 15.7%.  For developing economies, the fiscal balance to GDP ratio is projected to rise from 4.8% to 9.1%.  According to the IMF, France, Germany, Italy, Japan, and the United Kingdom have each announced public sector support measures totalling more than 10% of their annual GDP.

International Monetary Fund (IMF) Projected Government Fiscal Balances Relative to GDP (In % shares of Gross Domestic Product).

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The government of India has already taken few measures and is planning to announce a stimulus package which would help India to tied over this crisis. Initially, the economic effects of the virus were expected to be short-term supply issues as factory output fell because workers were quarantined to reduce the spread of the virus through social interaction.  The drop in economic activity, initially in China, has had international repercussions as firms experienced delays in supplies of intermediate and finished goods through supply chains. 

Concerns are growing, however, that the virus-related supply shock is creating more prolonged and wide-ranging demand shocks as reduced activity by consumers and businesses lead to a lower rate of economic growth.  As demand shocks unfold, businesses experience reduced activity and profits and potentially escalating and binding credit and liquidity constraints.  

While manufacturing firms are experiencing supply chain shocks, reduced consumer activity through social distancing is affecting the services sector of the economy.  In this environment, manufacturing and service firms are hoarding cash, which affects market liquidity.  In response, central banks have lowered interest rates where possible and expanded lending facilities to provide liquidity to financial markets and to firms potentially facing insolvency.

COVID 19 Impacts in Rural India

The COVID-19 pandemic has brought the entire nation to a halt.  Health officials and medical professionals are struggling with containing the disease, and testing and treating affected people.  The risk of spread in rural areas is heightened.  This is due to a number of factors, including lack of awareness, a limited supply of clean water, low levels of nutrition, and most importantly, ill-equipped and insufficient public health centres and district hospitals.  The informal industry in cities being badly affected has resulted in loss of rural income because a significant proportion of rural household incomes come from migration and daily-wage labourers. What’s more, massive layoffs and lack of relief measures are pushing migrants to return to their villages, which would increase the risk of the spread of the virus.

Necessary of Health Education

Health emergencies put health systems and their ability to deliver health care services under strain.  Currently, health care services in Asian Region are being confronted with increased demand generated by the COVID-19 outbreak.  To minimize the consequences of disruptions to the delivery of essential health care services, national health authorities and health service planners will need to ensure dedicated planning structures are in place, rural population risks are stratified, delivery settings/platforms and provider arrangements are modified or reconfigured, and financial and physical resources are made available accordingly.

As you know a new respiratory disease called COVID-19 is spreading across the world.  India has also reported cases from states and the government is trying to contain the spread of the disease.  As an important primary healthcare worker, play a major role in preventing its spread.  Training the entire health workforce is essential in recognizing and managing the symptoms of COVID-19 and repurposing the workforce for priority services – both for the COVID-19 response and to support essential health care services – will be critical areas that will need attention.  It is an effort to promote awareness on the pandemic and the need to take precautions for common people, which will prevent the disease spread in community at lower level, by decentralizing can minimise the burden on hospitals.

COVID 19 Impacts in Urban India

Mobility is an essential part of urban life.  People travel for various reasons, such as going to work, educational institutions, recreation and shopping.  Asian cities offer diverse means of commuting: walking, cycling, motorcycles, public and mass transport, micro-mobility, para-transit, private cars, public taxis and ride hailing systems.  On the other hand, we have seen improvement in air quality and reductions in CO2 emissions due to the decrease in transport activity. But these are short-term gains and air pollution and emissions are expected rise again once the situation is resolved.  

The novel corona virus (COVID-19) crisis in India may disproportionately hurt millions of urban poor living in slums across major cities. Over 65 million or 22% of India’s urban population lives in urban slums, which are characterized by acute poverty, over-crowding, unhealthy living conditions, and a weak urban public health setup.  A majority of the families living in slums are migrant workers who living under or near poverty may not have disposable cash to stockpile food or basic necessities for a more than 5 weeks lockdown, leaving them vulnerable to hunger, malnutrition, and increasing their vulnerability to the virus.  

A potential outmigration of the urban poor back to the villages may also exacerbate the extent of the outbreak in India.  The implications of a Covid-19 outbreak in the urban slums can be disastrous for the urban poor and the public health setup.  In the absence of affordable and quality public healthcare, families living in slums run the risk of deep impoverishment, disease, and death.  On the other hand, the public health system runs a high risk of getting overrun by patients.  The health systems are experiencing increasing challenges in absorbing the impact of the disease, flattening the curve of virus expansion is critical to reduce the pressure on hospitals.

The pandemic is likely to impact the country’s economy through the following four vectors

A. Supply disruptions:

• Dependence on China for imports of raw and intermediate materials;

• Higher input prices and reduced profitability, leading to decline in capacity building;

• Supply – side disruptions may be temporary as China revives production units.

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B. Global & Domestic Demand:

• Consumer spending to take a hit due to movement restrictions and fear of falling sick;

• Reduced wealth effect due to falling share prices.

• Hospitality and aviation sectors are impacted the most at a short span of time;

• Low profitability and production disruptions impact business sentiments and investments;

• Loss of employment, especially in the informal sector and for contractual workers, reduces consumer spending;

• Demand in top few export destinations (China, the United States, and Europe) accounting for 40% of India’s export is severely hit.

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C. Stress on banking and financial sectors and parameters

Banks:

• Exposure to stressed industries and Micro, Small and Medium Enterprises (MSMEs);

• Rising consumer loan default because of high unemployment and household leverage;

• Stress on banks impact credit growth.

 

Capital Market and financial parameters

• The stock market has fallen 30% since pandemic started spreading in the west;

• A sharp depreciation of rupee against the dollar worsens trade deficit as exports contribution to GDP is low;

• Rising bond yields make borrowing more expensive, thereby reducing bank margins.

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D. Falling Oil Prices

• Oil prices have fallen sharply. Brent crude oil fell from US$68.5 per barrel on 3rd January to US$28.2 per barrel on 20th March.

• Lower Oil prices could be a boon for India’s twin deficit (the fiscal and current account);

• Gives policymakers some headroom to act;

• The rupee depreciation may partially offset the gains. Rupee has depreciated from INR. 71.7 per US$ on 3 January to INR. 75 per US$ on 20th March.

 

How best to fight the Economic Impact of the COVID 19 Pandemic?

We know that nations need a healthy population to prosper. Stepping up investment in public healthcare is pivotal to sustaining India’s economic growth. Government has announced a series of measures including distribution of essential commodities, actual cash and incentives which should be through state and central PSUs to make then long term benefit to the beneficiaries.  These enterprises should be incentivised through policy measures of giving them operational benefits including extra FSI and preferences with commitments to long term growth.  

Many Global companies want to set up base in India and they should play a catalytic role for their successful expansion in India.  The healthcare access to all patients should be complemented by setting up manufacturing systems in the upcoming Smart cities which should be Hubs for development. Secured Governance strategy designed to minimise the gap of Healthcare infrastructure of the social sector and promote private participation in infrastructure development. The value and valuation strategy offers sophisticated funding mechanism and tailored to the economic growth and generate huge employment opportunity.

The Secured Governance strategy designed to help government through the private & foreign sector investment, and non-profit organisation when to open their economies, and the second outlines an approach for how to do so in this COVID – 19 pestilence period.  This is a novel strategy that consists in promoting infrastructure (Healthcare HUB) development that integrated with all key supporting sectors such as transport, power, telecom, banking, education, etc.

We all know when development takes place there is valuation in property.  Who benefits from this?  More often than not it is incidental and taken advantage of by land and property sharks.  Imagine a model where this valuation can be ploughed back into the project and also benefit the people around.  

First, the development cost of the Healthcare HUB is reduced, and can actually be at negligible cost to the government if carefully planned.  Next, the population sees it as benefitting them and so they participate more enthusiastically, helping with early completion of the project rather than being an impediment.  The strategy could provide a generic pathway to capture a part of the increased value by investment made by private stakeholders and helps repayment of loan for infrastructure (HUB) development.  This mechanism could help to bridge the gap of healthcare population ratio drastically and could provide effective control of COVID - 19 spread and public – health response in this critical time.

India needs to be becoming a major international HUB for the global healthcare industry. It is already home to the world’s largest medical tourism zone.  The HUBs would stimulate private investment in new developments from domestic and international players, Research & Development in medical field, advanced technology zone including global University for Healthcare sector and its focus on becoming a global medical tourism HUB.  

The HUB of a diverse healthcare economy that includes the life sciences and a digital health cluster that leverages the strong private investment/venture capital landscape, major academic medical centers, institutions of higher learning and a highly skilled and educated workforce to meet the shortage of healthcare workers in India. 

Around 700+ Mini medical HUBs with 50 bed facilities and more than 10,000 nano medical HUBs need to be developed in all the districts of India.  Rural people could get easy access in this healthcare mini and nano HUB. There could be a strong commitment from both the public and private sectors. Players from both sides are working together and investing to continue building an ecosystem that fuels innovation in the life sciences and digital health industries.  

The healthcare innovations and unprecedented public-private support could boost the healthcare economy in India and lead the sustainable economic growth in the post COVID - 19.  With this India could have quick regrouping of its growth strategies and cater to the Global expectations to War to victory through good leadership skills.

Article contributed by Dr. Sanjay Pattiwar

SARFARAZ LAKHANI

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