Thursday, April 9, 2020

Lock-Down is Shock Therapy: Move to Next Stage

   Lock-Down is shock Therapy. It has served its purpose if use the time to prepare for alternatives which meet the Objective and Goals for which it was introduced.  Our Objective is to Slow the transmission of SARS Corona Virus 2. The Goal is to Reduce Contact between potential carriers and the uninfected. The key question is how to do this at least cost to the public? This requires us to understand what has worked and not worked Globally, but also our own special conditions and limitations.
     Comprehensive testing of population in a large, poor country is impossible. Ideally, all those with suspicious symptoms and clinical appraisal by the local doctor/clinic, would isolate themselves at home and those with international travel history or contacts with same would be tested & those confirmed as infected, be isolated in special facilities.  This has not worked even for those who seem too have brought the virus from abroad through air/sea travel to and from India (Indian & foreigners). Therefore, home isolation must be made more stringent through use of mobile Apps or GPS enabled electronic wrist bands/anklets. International travel & tourism must be banned till the Pandemic has passed world-wide. Domestic travel for tourist purposes will also have to be controlled till Epidemic has passed in India.
      Wearing of Masks (even home-made ones) helps reduce transmission of virus from infected persons and must be made compulsory for 3-6 months. It must be encouraged even inside the home if there are suspected cases of Corona Virus Infection in the family and for those coming into the home from outside. Hand washing with soap has been recognized and accepted as a method for slowing transmission.  Free distribution of soap and washable, triple layered, cloth, masks can help promote their use by the relatively less well-off sections of society.
    Socio-Spatial (Social) Distancing is a critical measure for slowing transmission while engaging in essential economic activities. With exception of factories and workplaces, no gathering of more than four adults must be allowed till the Virus has been tamed. This includes religious gatherings, festivals, celebrations, conferences, seminars and private parties in restaurants, hotels or homes. Consumer Activities in which more than four adults are normally present in a confined space, less than 2-3 meters apart (e.g. Airlines, Malls, Markets, trains) must be carefully controlled and phased, for the duration of the Pandemic. Spatial distancing of 1-2 meters must be enforced compulsorily in all permitted activities, including the Workplace.
For Public policy purposes, it's useful to consider three different sets of Districts: (1) Those which are completely free of virus. (2) Those which are heavily infected. (3) Districts with small number of cases. Govt should consider banning entry of people into the set of Virus free districts and exit out of heavily infected Districts for a few months.
  My colleague Rattan Chand at The Foundation for Economic Growth and Welfare, finds that, "in 50% of ~700 districts there's no Corona positive case. 75 have 1 corona positive case each and 40 districts have 2 positive cases each.  60 districts have 3-5 positive cases, while only 175 districts have more than 5 cases. Govt should define a Contiguous Zone of virus free districts & low infected (1-5 case) districts which are contiguous to them, into which entry from outside is banned.  Similarly exit out of heavily infected Districts could be banned for a few months. Normalization can be phased in at a different pace in each set of districts.
The second aspect is the distinction between production & trading of goods and their support services (e.g. transport, delivery) and Services in which production and consumption occur simultaneous to many people, or in the presence of many other people (eg Airlines, Markets/shops, cinemas, hotels, restaurants). We (+ Karan Bhasin) have estimated that about 45-50% of GDP is in the former and about 15-20% in the latter. (e.g. hospitality). Though production cannot resume without export demand or domestic consumption, it is possible to differentiate between the two when phasing out controls. Much Quicker freeing of the former is desirable and feasible. It should also be assured that the remaining 35% is GDP from essential goods and services, which is formally free even under Lock-down, is not hampered by administrative constraints and limitations.
The third important aspect of Public policy in India, is that, the living spaces are worse than the work-spaces, for those living in one room tenements and Urban/semi-urban slums (30% of population, say). Consequently, confining everyone to their homes, can accelerate transmission of the Virus, for this segment of population, instead of slowing it down. We should therefore be very wary of mechanical suggestions to extend Lock-down, without careful analysis of Benefits and Costs.

   Next, we need to consider some of the facts and data available to us about the Global spread of Corona Virus Pandemic. The cross-country average (185 countries), of Corona virus related Deaths (CVD) to detected Corona virus cases (CVC) is ~0.027 or 2.7%. India's death rate is exactly equal to this average. There is little reason to believe that this is biased, compared to other countries. The average number of cases per thousand of population for the same set of countries is 0.267. This compares with normal death rates in countries like India and USA of 6 to 8 per thousand.
   The number of corona virus cases in India is ~ 0.001 per thousand of population. There is a combination of likely reasons for this; (a) Early action to reduce travel from China and other infected countries to India. (b) One of the most stringent lockdowns in the world, perhaps the 5th country to impose a national lockdown. (c) Lower levels of testing than richer countries and consequent lower rate of detection of confirmed cases. (d) Higher ambient temperatures then most developed countries, except those like Singapore which are near the equator. (e) Lower mobility internationally and domestically than richer countries, (f) Higher percentage (70%) of population in Rural & semi-rural areas with lower population density and consequent natural Socio-spatial (Social) Distancing, and (g) social practice of women covering faces with “Chunni”, “Saree-Pallu” or Burqa, when outside the house.
However, we should expect and prepare for, a rise in the number of CV cases, closer to the World average, before the pandemic is controlled. We expect the infection rate to creep up closer to the international average but is highly unlikely to exceed it.
        Finally consider the effect of the Lock-down on GDP. The current lock down exempts essential commodities. According to our estimates about 35% of the Economy is therefore exempt. The rest of the economy (65%) is virtually shut down, with no production and no consumption of the goods and services it produces. We estimate that the Lock-down has reduced GDP by 2.8% of what it otherwise would have been. If the nationwide Lock-down is extended to end of April the cost will go up to 5% of GDP and to 9% of GDP if it continues till end May.
   In my view the Lock-down has served its purpose of national shock therapy. There are now better alternatives available to replace it and get the Nation progressively back to work.  Therefore, a lifting of the Lock-down with the personal, public, sub-regional and Sectoral safeguards, along the lines analysed above, is recommended.
The author, Dr Virmani, is Chairman of the Foundation For Economic Growth and Welfare (EGROW).

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