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The gradual reopening of India’s economy after a 43-day coronavirus lockdown has been marred by a hyper-centralisation of decision-making. Deepening mistrust between New Delhi and the 28 states threatens to splinter the country’s common market of 1.3 billion people, its biggest draw for investors.
With infections surging by nearly 50% to cross 70,000 since the shutdown was eased about a week ago, it’s clear that one-size-fits-all rules have been less than a stellar success. They have forced states to sacrifice the little revenue they generate by, among other things, taxing fuel etc. That’s left them fighting for a fair and timely share of dwindling federal resources, and scrambling to raise funds in the bond market. It’s impossible to conclude that a more localised approach would have contained the pandemic.
Still, states left to act on their own might have fared better in lowering both the human cost of the tragedy and its grave economic
consequences.
Amarinder Singh, chief minister of the northwestern state of Punjab, begged Prime Minister Narendra Modi on a video conference call to let him have a say in restarting some parts of the industrial centres of Ludhiana and Jalandhar. Both have been marked as red zones by New Delhi, forcing a halt to everything except essential services. Punjab relies heavily on surplus rural labour from less prosperous states in northern and central-eastern India. More than a million out of the 1.3 million who are stuck in Punjab with no jobs or money have signed up to go back home on special trains arranged by the Modi government, Singh said on the call. How can he get them to stay?
States aren’t being unrealistic in demanding more money and a little freedom. No political leader wants to take the risk of getting overwhelmed by Covid-19 by allowing a full reopening just yet. But the western state
of Maharashtra, which has seen the greatest spread of the disease, wants Modi to allow the resumption of Mumbai suburban trains — the lifeline of India’s financial and entertainment capital — for workers providing essential services.
States that have succeeded in beating back the virus are also struggling to stay afloat. In the south,
Kerala is facing the double whammy of no local production and migrant workers returning from the Middle East. It wants states’ borrowing limit to be raised, and for the central bank to purchase their bonds directly if investors won’t.
—Bloomberg