India Begins to Unwind: The View from Mumbai in May

04 Jun 2020
India Begins to Unwind: The View from Mumbai in May
Not a month into Greg Wilcock’s tenure as Australia’s new Consul General to Mumbai, did India’s most populous city embark on the nation-wide COVID-19 lockdown. On March 24, following a televised address by Prime Minister Narendra Modi, India’s 1.3 billion people shut down non-essential economic and social activity in an attempt to curtail the spread of the virus.
 
Initially a 21-day lockdown, India’s Centre and the States extended the lockdown three times, with an incremental loosening of restrictions announced at each stage. As at late May, India’s ongoing lockdown had been comparatively successful in reducing the spread of the virus. Notwithstanding, India’s cases are stilling growing, and Maharashtra State with its capital Mumbai is India’s COVID-19 epicentre.
 
On the 25th May, Consul General Wilcock was able to join the Perth USAsia Centre and stakeholders to provide an on-the-ground update, followed by a private discussion conducted under Chatham House Rule. Key topics of the online discussion included:
  • COVID-19 is still a significant health challenge: As a large developing economy, India has been comparatively successful in curtailing the spread of COVID-19. Most notably, the lockdown has stretched India’s doubling rate from three days to over ten days. Furthermore, the nation’s limited health capacity has ramped up, including rapid investments in mobile hospitals and COVID-19 testing capacity. Notwithstanding, COVID-19 remains a significant health challenge for India, particularly as restrictions unwind and an uptick in cases likely eventuates. In India’s many poor and remote areas, there is the potential for humanitarian challenges to seriously escalate. It was put forward that in future Indian budgets, public health investments are necessary to begin to rectify India’s longstanding shortfalls in public health infrastructure. 
  • Kick-starting the economy is a priority: At each new stage of lockdown, further economic restrictions have been unwound – for example in enabling some non-agricultural rural activity in “Lockdown 2.0”, and some non-essential urban production in “Lockdown 3.0”. While India was originally forecast to avoid a COVID-19 recession, the longer significant restrictions remained in place the more likely and prolonged any contraction will be. Given the necessity of economic growth for India to simply feed, power and pay its people, opening up activity is essential. As outlined by PM Modi in his “Lockdown 4.0” national address, India therefore needed to learn to live with the virus, whilst regenerating economic activity.  In Mumbai, it was expected the economy would remain an engine room of Indian growth, but for a prolonged period would not be firing on all cylinders.
  • India’s reform pathway: With limits on the fiscal capacity of the federal government to drive economic activity, India’s recovery and future development demands significant economic reforms. Further to India’s four phases of lockdown, the Central Government has also implemented four tranches of economic stimulus. Accompanying these stimulus tranches were a number of economic reform announcements – focusing on how India regulates land and labour, and the how involved the Indian State is in conducting economic activity. Reform announcements included the privatisation of some state owned enterprises, the deregulation of certain sectors, and an increase to certain foreign direct investment thresholds. Following calls from Prime Minister Modi for India to be more “self-reliant”, as well as more involved in regional value chains, it was discussed that India’s challenge will be to encourage economic growth through sustained economic reform and liberalisation, not by turning inward. 
Concerning the Australia-India relationship, it was put that COVID-19 in will bring the two countries closer together, both economically and strategically. It was noted that similar discussions are occurring in both countries – around diversifying supply chains, managing regional uncertainties, and strengthening regional partnerships to spread risks. The 4th June Virtual Summit between Prime Ministers Modi and Morrison will be the next opportunity for the two nations to chart a post-pandemic path forward together.

Authors

Hugo Seymour
Hugo Seymour
Research Analyst
Hugo Seymour is the Research Analyst at the Perth USAsia Centre. He develops content and publishes on Western Australia and Australia's engagement in the Indo-Pacific region.
More details
back to blog