APRIL 14TH was a big day in India. Hindus and Sikhs gathered to mark the new year. Many Muslims celebrated the first day of Ramadan at late-night feasts with friends and family. In Haridwar, a temple town that this year hosts the Kumbh Mela, an intermittent Hindu festival that is the world’s biggest religious gathering, between 1m and 3m people shoved and jostled to take a ritual dip in the Ganges. And across the country, the number of people testing positive for covid-19 for the first time surpassed 200,000 in a single day.
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It has continued to surge since, reaching 315,000 just one week later—the highest daily figure in any country at any point during the pandemic. Deaths, too, are beginning to soar, and suspicions abound that the grisly official toll is itself a massive underestimate. Makeshift pyres are being constructed on pavements outside crematoriums to deal with the influx of bodies.
This horrifying second wave is a catastrophe not only for India but for the world. Allowing the virus to circulate unchecked increases the risk that dangerous new strains will emerge. One worrying variant first detected in India, called the “double mutant”, has already been found in several other countries, including America and Britain. Even as scientists labour to understand how big a threat it poses, more variants are appearing.
A more immediate consequence of India’s second wave for the rest of the world is a disruption to vaccine supplies. India had hoped to be the world’s pharmacy. But with case numbers exploding the government has restricted exports of vaccines.
In the first half of April India shipped just 1.2m doses abroad, compared with 64m in the three prior months. The Serum Institute of India, a private company that manufactures the AstraZeneca vaccine, has defaulted on commitments to Britain, the European Union and COVAX, a scheme to supply more shots worldwide. African countries that had been counting on India to provide them with vaccines are looking on in dismay.
With its crowded cities and rickety health care, India is not an easy place to curb an infectious disease. Yet some parts of the country were remarkably successful for a time at slowing transmission. Deaths from the first wave of the pandemic, which peaked in September, were surprisingly low, for reasons that are not clear.
India was quick to institute a nationwide lockdown a year ago, albeit one that failed to plan for the millions of unemployed migrant workers who were at first corralled, destitute, in cities and then allowed to return to their native villages, taking covid-19 with them.
In short, until earlier this year, India’s government, like so many others, had a patchy but not disastrous record in fighting the pandemic. But through complacency and distraction, the govt. has allowed things to spiral out of control.
By mid-February the government had ordered barely enough doses to protect 3% of the population (not counting those it is hoping to get from COVAX).Keen to promote India’s scientific prowess, regulators approved Covaxin, an indigenous vaccine, before it had completed all the necessary trials, even as they insisted that foreign shots must clear extra hurdles. Less than 10% of the population has received a first dose of vaccine. This is more than in many countries, but India is a huge vaccine-producer and could have done better.
There are signs of improvement. On April 13th the government announced fast-track approval for imports of vaccines that have been approved by various countries. It is also belatedly throwing money at procurement. This week it said it would release some $400mto help the Serum Institute boost production. Government updated its vaccine policy to allow anyone over the age of 18 to get a shot, starting next month.
That is of limited use, however, given the shortage of supply that prevails in most of the country. Several states have already run out. India is vaccinating only 3m people a day, or 0.2% of the population, barely exceeding some rough estimates of the real number of daily infections. And even if production increases or more doses arrive from abroad, the current wave is too severe to be stopped by inoculations alone.
Ways must quickly be found to ramp up vaccine production. That does not mean seizing control of private firms or their output, but rather helping them secure the supplies they need from countries such as the United States. Unless India’s second wave is brought under control, the entire world will suffer.
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Steve Ovett, the famous British middle-distance athlete, won the 800-metres gold medal at the Moscow Olympics of 1980. Just a few days later, he was about to win a 5,000-metres race at London’s Crystal Palace. Known for his burst of acceleration on the home stretch, he had supreme confidence in his ability to out-sprint rivals. With the final 100 metres remaining,
[wptelegram-join-channel link=”https://t.me/s/upsctree” text=”Join @upsctree on Telegram”]Ovett waved to the crowd and raised a hand in triumph. But he had celebrated a bit too early. At the finishing line, Ireland’s John Treacy edged past Ovett. For those few moments, Ovett had lost his sense of reality and ignored the possibility of a negative event.
This analogy works well for the India story and our policy failures , including during the ongoing covid pandemic. While we have never been as well prepared or had significant successes in terms of growth stability as Ovett did in his illustrious running career, we tend to celebrate too early. Indeed, we have done so many times before.
It is as if we’re convinced that India is destined for greater heights, come what may, and so we never run through the finish line. Do we and our policymakers suffer from a collective optimism bias, which, as the Nobel Prize winner Daniel Kahneman once wrote, “may well be the most significant of the cognitive biases”? The optimism bias arises from mistaken beliefs which form expectations that are better than the reality. It makes us underestimate chances of a negative outcome and ignore warnings repeatedly.
The Indian economy had a dream run for five years from 2003-04 to 2007-08, with an average annual growth rate of around 9%. Many believed that India was on its way to clocking consistent double-digit growth and comparisons with China were rife. It was conveniently overlooked that this output expansion had come mainly came from a few sectors: automobiles, telecom and business services.
Indians were made to believe that we could sprint without high-quality education, healthcare, infrastructure or banking sectors, which form the backbone of any stable economy. The plan was to build them as we went along, but then in the euphoria of short-term success, it got lost.
India’s exports of goods grew from $20 billion in 1990-91 to over $310 billion in 2019-20. Looking at these absolute figures it would seem as if India has arrived on the world stage. However, India’s share of global trade has moved up only marginally. Even now, the country accounts for less than 2% of the world’s goods exports.
More importantly, hidden behind this performance was the role played by one sector that should have never made it to India’s list of exports—refined petroleum. The share of refined petroleum exports in India’s goods exports increased from 1.4% in 1996-97 to over 18% in 2011-12.
An import-intensive sector with low labour intensity, exports of refined petroleum zoomed because of the then policy regime of a retail price ceiling on petroleum products in the domestic market. While we have done well in the export of services, our share is still less than 4% of world exports.
India seemed to emerge from the 2008 global financial crisis relatively unscathed. But, a temporary demand push had played a role in the revival—the incomes of many households, both rural and urban, had shot up. Fiscal stimulus to the rural economy and implementation of the Sixth Pay Commission scales had led to the salaries of around 20% of organized-sector employees jumping up. We celebrated, but once again, neither did we resolve the crisis brewing elsewhere in India’s banking sector, nor did we improve our capacity for healthcare or quality education.
Employment saw little economy-wide growth in our boom years. Manufacturing jobs, if anything, shrank. But we continued to celebrate. Youth flocked to low-productivity service-sector jobs, such as those in hotels and restaurants, security and other services. The dependence on such jobs on one hand and high-skilled services on the other was bound to make Indian society more unequal.
And then, there is agriculture, an elephant in the room. If and when farm-sector reforms get implemented, celebrations would once again be premature. The vast majority of India’s farmers have small plots of land, and though these farms are at least as productive as larger ones, net absolute incomes from small plots can only be meagre.
A further rise in farm productivity and consequent increase in supply, if not matched by a demand rise, especially with access to export markets, would result in downward pressure on market prices for farm produce and a further decline in the net incomes of small farmers.
We should learn from what John Treacy did right. He didn’t give up, and pushed for the finish line like it was his only chance at winning. Treacy had years of long-distance practice. The same goes for our economy. A long grind is required to build up its base before we can win and celebrate. And Ovett did not blame anyone for his loss. We play the blame game. Everyone else, right from China and the US to ‘greedy corporates’, seems to be responsible for our failures.
We have lowered absolute poverty levels and had technology-based successes like Aadhaar and digital access to public services. But there are no short cuts to good quality and adequate healthcare and education services. We must remain optimistic but stay firmly away from the optimism bias.
In the end, it is not about how we start, but how we finish. The disastrous second wave of covid and our inability to manage it is a ghastly reminder of this fact.