Lives and Livelihood: An Exit Strategy from Lockdown for India

Abstract

India is among the select countries which reacted quite early to the threat of COVID -19. It announced a nationwide lockdown at an early stage on 25th March 2020, which has now been extended till 3rd May 2020. This has helped keep the numbers of infections and death low in a densely populated country like India. By all indications, though, this is going to be a long fight. In all likelihood “back to normal” can only happen when a vaccine is discovered, produced and administered to a large population. According to epidemiologists, that may take up to two years. It is obvious that we cannot be in a lockdown that long. We have to find ways to let the economy function in a safe way. So far, the government’s strategy on opening up the economy hinges on primarily one aspect – geography. The strategy involves locating areas that have high number of infections and close those areas, while let the other areas operate. This will allow a very limited amount of economic activity. We look at the districts that have COVID – 19 infections and find it has a high correlation with nightlight density, which is a proxy for economic activity in the districts. This is corroborated by a report today which states that according to RBI 170 districts designated as Covid-19 hotspots account for 80% of the credit. Hence, using this as the only parameter is limiting. So, what can be done? We propose a strategy of opening the economy that considers three things: Geography, Work From Home capability, and Centrality. We start by looking at infection rates in a district on a rolling average basis, then look at two industry characteristics. The first is Work From Home (WFH) capability. We first look at occupations and find which of these can be performed from home. Then we decompose each industry into these occupations and figure out which of these industries can operate with limited on-site support. We find that about 15% of workers can return to work following this. Then finally we create a network of industries based on the inputs they use. Since all industries use output from other industries, it is important to let those industries operate that are more central in the network. We rank these industries according to centrality. We suggest that the industries which are above certain rank can be allowed to resume operations by maintain strict social distancing and hygiene using methods like alternate shifts etc. This will allow the economy to resume operations and limit the negative impact of COVID – 19.