Localised Lockdowns Didn’t Help Curb Virus Spread, Instead Impacted Economy: SBI Report

New Delhi: Several states imposing localised lockdowns in July and August, after the four phases of nationwide lockdowns ended, have done little to tackle the spread of COVID-19 while impacting economic activities, a recent report published by the State Bank of India (SBI) said.

The report, prepared by a research team headed by SBI group’s chief economic advisor Soumya Kanti Ghosh, says: “States have resorted to partial lockdowns in July and August. However, the same has not led to lower number of Covid Cases.”

Failure of Localised Lockdowns

Presenting data for states which imposed partial lockdowns since July 10, the report shows that the seven-day moving average of new coronavirus cases increased by August-end in those states when compared to the seven-day moving average before the lockdowns. The regions in question include West Bengal, Uttar Pradesh, Punjab, Haryana, Chandigarh, Mizoram states and Hingoli district in Maharashtra. “States must move out of self imposed lock down mentality,” the SBI report said.

Several states imposed full and partial lockdowns in July and August. West Bengal had announced complete lockdown on July 23, 25 and 29 while Uttar Pradesh had imposed a lockdown between July 10 and 13, and so on.

Following the haphazard imposition of localised lockdowns, the Union Ministry of Home Affairs (MHA) on August 29 revoked the power of states to lock down areas outside of containment zones. In its past guidelines and norms, the MHA had asked states not to restrict the movement of people and goods across districts or state borders.

Source: SBI Report ‘Thee Months After Unlock’

The report points out that the partial lockdowns have led to a “perverse” result of “increase in cases as short lockdowns have undesired impact of large conglomerations before designated lockdown date.”

The overall Google Mobility data reveals improvement in average mobility across states in August, the report says. However, it isn’t directly related to increase in cases. Certain states including Madhya Pradesh, Maharashtra, Mizoram, Puducherry, Punjab, Rajasthan and Uttarakhand showed decline in mobility but witnessed increase in Covid cases. “Thus the partial lockdown/ restrictions imposed have not helped in curbing the spread of virus,” the report concludes.

The localised lockdowns disrupted supply chains and also impacted labour participation, the data presented by the report shows.

Increasing Spread in Rural India

The data indicates that the virus is showing increasing spread in rural areas. In August, out of the 50 districts worst-affected by COVID-19, as many as 26 were rural. “Rural areas in Andhra Pradesh are worst hit. Maharashtra, Karnataka and Uttar Pradesh are showing increasing rural spread,” the report says.

The increased rural spread means consequences for the country’s economy. The report says that among the rural districts which had less than 50 cases in April, but faced increasing spread in August, there are four districts that contribute more than 10% to respective GSDP.

The state-wise GSDP Loss shows a disproportionate share belonging to rural areas of states like Andhra Pradesh (rural loss share 71%), Uttar Pradesh (69%), Madhya Pradesh (71%) Telangana (71%), Bihar (86%) and even Rajasthan (75%). These states mostly produce cereals and pulses among other crops.

Impact on Economy

The economy peaked up in August end as per the SBI Business disruption index. However, all the economic indicators remain far away from the last year’s peak--such as labour participation rate, electricity demand, no. of transactions at RTOs, etc, the report says. It adds, “The decline in Labour force participation rate is a matter of concern as it indicates a large percentage of labour is still wary of returning to work given the spread of pandemic.”

Moreover, low weekly arrival of food at mandis in August indicates disruptions in supply chain across states and it continues to manifest in price increases, the report says.

Further, in the three months since the Unlock phases began, rural unemployment rate has again “increased moderately” in August while the employment created under MGNREGA as well as average wages has declined in the same month.

The SBI report has also predicted that the peak in coronavirus cases is still at least a month away.

“Daily Covid cases rose from around 50,000 daily in Aug beginning to around 80,000 cases by Aug-end. If the states increase their test capacity to match their test positivity, the total number of cases could hypothetically even increase by up to 50,000 over current levels on a daily basis! This implies the peak is still at least a month away if not more!” says the report.