COVID-19: Government gave no thought to consequences of lockdown in India, Chidambaram says

The government of Indian Prime Minister Narendra Modi was unprepared and no thought had gone into the consequences of a 21-day lockdown, says Congress leader P. Chidambaram.

Migrant workers should never have been put through the ordeal of walking thousands of kilometers home.

The former Indian finance minister has been considered one of the better managers of the economy, especially after his dream budget in 1997 when he lowered taxes to boost compliance.

With the Indian economy in critical care post the coronavirus pandemic, I spoke exclusively to Chidambaram for Gulf News and asked what he would do to reset the economy. A combative Chidambaram, who was jailed by the Modi government, has a sharp diagnosis.

We are in lockdown 3.0, do you think the Modi government has handled this grave and unprecedented pandemic properly?

I am afraid, no. The decision to impose lock-down 1.0 was correct because the objectives were to (1) spread awareness (2), slow the spread of the virus, and (3) buy time to build the health and medical infrastructure. Each of these objectives required advance planning and a state of preparedness. The government was totally unprepared and no thought had gone into the consequences of a 21-day lockdown.

The lockdown was imposed with four hours' notice by Modi, which led to the exodus of migrant labourers. How would you have tackled it?

I would have given at least three days' notice before the lockdown took effect. I would have transferred cash and grain to the bottom 50 per cent of the poor families so that they can survive for a month, and that would have included migrant workers. I would have promised the migrant workers that, notwithstanding the cash and grain transfer, if some sections wanted to go back to their home states, trains and buses would be organised over a period of one month to transport them in an orderly fashion.

The Congress party said they would pay the migrants rail fare, this seemed to be the only productive offer from the Opposition. The government says the Opposition is politicising the pandemic. Your response?

Rubbish. The Congress Working Committee has passed resolutions and the Congress president has, and Mr Rahul Gandhi has, written several letters to the Prime Minister containing specific and concrete suggestions. I have written an Op-Ed, several columns and numerous tweets, making specific and concrete suggestions. The government has not even acknowledged them.

It is estimated that 120 million people have lost their jobs. What would you do if you were the finance minister?

I would be finance minister in a Congress-led government and under a Congress prime minister. I would have implemented the suggestions that the Congress party and I had made over the last seven weeks.

How would the consolidated fund of India finance any meaningful relief effort?

The Consolidated Fund of India is an account. Financing would be done through the budget — through tax revenues, non-tax revenues and borrowing. I would not have hesitated to borrow more in order to fund relief and welfare measures and steps to re-start the economy.

Post demonetisation and the lockdown, will a significant proportion of India be pushed back below the poverty line?

Yes. Already the bulk of the poor is below the artificially drawn poverty line. Now even those above the so-called poverty line, and many lower middle-class families, will go below that line.

Given the tough choices facing the government, would you have recommended the Swedish model for India?

I don’t know much about the Swedish model. I know, however, that India cannot be compared with an advanced economy like Sweden in terms of size, population, per capita income and wealth, medical and health infrastructure, social organisation, governance model, obedience to law etc.

Will India’s financial system survive the lockdown and the economic devastation?

The financial system will suffer a severe beating, but it will survive. A prolonged lockdown will devastate the economy. We may have negative growth in 2020-21. Eventually, if there is a wise government, we will recover slowly.

What would you have done to stimulate the system?

I would have done several things including:

a) Cash and grain transfer to the bottom 50 per cent of families.

b) A comprehensive programme to protect and revive MSMEs [micro, small and medium enterprises].

c) Tax reliefs.

d) A substantial assistance programme to re-start large industries with sectoral packages.

e) Expand MGNREGA [Mahatma Gandhi National Rural Employment Guarantee Act]; reduce input costs of agriculture; ensure universal procurement.

f) Universal PDS [Public Distribution System].

g) Loan forgiveness and loan moratorium.

h) Massive spending on public works, especially infrastructure.

i) Additional borrowing and, as a last resort, monetise part of the deficit.

But even states where the Congress is in power don’t seem to have done a better job. Why?

Chhattisgarh and Puducherry are among the best performing states/Union Territories. Punjab and Rajasthan have done much better than the average state.

When the lockdown ends and the world hits the reset button, what will be the significant changes according to you?

With a Right-wing government in power in India, and the RSS pushing the swadeshi (nationalistic) model, I am unable to predict the future under the present government. As for the world, in the short-to-medium term, it may become protectionist and inward-looking.

Finally, how have you been spending your lockdown days?

Reading, writing, tweeting, attending party consultative group meetings, helping individuals or groups that are stranded and keeping in touch every day with Maharashtra and the Sivaganga constituency.