COVID-19 is disrupting some activities in agriculture and supply chains. Preliminary reports show that the non-availability of migrant labor is interrupting some harvesting activities, particularly in northwest India where wheat and pulses are being harvested. There are disruptions in supply chains because of transportation problems and other issues. Prices have declined for wheat, vegetables, and other crops, yet consumers are often paying more. Media reports show that the closure of hotels, restaurants, sweet shops, and tea shops during the lockdown is already depressing milk sales. Meanwhile, poultry farmers have been badly hit due to misinformation, particularly on social media, that chicken are the carriers of COVID-19.
Here are some measures are required to keep the agricultural sector and supply chains working smoothly:
The government has correctly issued lockdown guidelines that exempt farm operations and supply chains. But implementation problems leading to labor shortages and falling prices should be rectified.
Keeping supply chains functioning well is crucial to food security. It should be noted that 2 to 3 million deaths in the Bengal famine of 1943 were due to food supply disruptions—not a lack of food availability.
Farm populations must be protected from the coronavirus to the extent possible by testing and practicing social distancing.
Farmers must have continued access to markets. This can be a mix of private markets and government procurement.
Small poultry and dairy farmers need more targeted help, as their pandemic-related input supply and market-accessproblems are urgent.
Farmers and agricultural workers should be included in the government’s assistance package and any social protection programs addressing the crisis.
As lockdown measures have increased, demand has risen for home delivery of groceries and E-commerce. This trend should be encouraged and promoted.
The government should promote trade by avoiding export bans and import restrictions.
Using social safety nets as a bridge between health shock and economic shock
The lockdown has choked off almost all economic activity. In urban areas, leading to the widespread loss of jobs and incomes for informal workers and the poor. Estimates by the Centre for Monitoring Indian Economy show that unemployment shot up from 8.4% in mid-March to 23% in the first week of April. In urban areas, unemployment soared to 30.9% as of April 5. The shutdown will cause untold misery for informal workers and the poor, who lead precarious lives facing hunger and malnutrition.
The best way to address this urgent need is to use social safety nets extensively to stabilize their lives with food and cash.
The Indian government has quickly responded to the crisis and announced a $22 billion relief package, which includes food and cash transfers. Several state governments have announced their own support packages.
The central government’s relief package, called Pradhan Mantri Garib Kalyan Yojana (Prime Minister’s plan for well-being of the poor), is aimed at providing safety nets for those hit the hardest by the COVID-19 lockdown. However, it is inadequate compared to the enormous scale of the problem. Nobel Prize economists Esther Duflo and Abhijit Banerji say that the government should have been much bolder with the package’s social transfer schemes. The $22 billion in spending is only 0.85% of India’s GDP. This is much lower than the packages passed by the United States, European and some Asian countries. India should think bigger, and be spending at least 4% to 5% of GDP. The central and state governments must spend more, even if there is one-time hike in the fiscal deficit.
Below are some additional measures needed in addition to the government package:
Food and nutrition security. Government warehouses are overflowing with 71 million tons of rice and wheat. In order to avoid exclusion errors, it is better to offer universal coverage of distribution in the next few months. Nutrition programs like Integrated Child Development Services (ICDS), mid-day meals, and Anganwadis (rural child care centers) should continue to work as essential services and provide rations and meals to recipients at home. Eggs can be added to improve nutrition for children and women. Several state governments have started innovative programs to help informal workers and the poor. For example, the Kerala government is providing meals with diversified diets at the doorsteps of households.
Cash transfers. Unemployed informal workers need cash income support. The government has provided Rs. 500 ($6.60) per month to the bank accounts of 200 million women via the Jan Dhan financial inclusion program. But this too is insufficient. We need to have a minimum of Rs.3000 ($40) per month in cash transfers for the next three months.
Migrant workers. There are about 40-50 million seasonal migrant workers in India. In recent days, global media have broadcast images of hundreds of thousands of migrant workers from several states trudging for miles and miles on highways; some walked more than 1000 kilometers to return to their home villages. They should be given both cash transfers and nutritious food.
COVID-19 is an unprecedented challenge for India; its large population and the economy’s dependence on informal labor make lockdowns and other social distancing measures hugely disruptive. The central and state governments have recognized the challenge and responded aggressively—but this response should be just the beginning. India must be prepared to scale it up as events unfold, easing the economic impacts through even greater public program support and policies that keep markets functioning.