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India put 1.3 billion people in lockdown over Corona virus

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India move to put its 1.3 billion people in a 21-day lockdown to contain the coronavirus outbreak will disproportionately hurt the informal sector, experts told Press.

Prime Minister Narendra Modi in a televised address Tuesday said people would not allowed to leave their homes after the order went into effect hours later at midnight. He also announced that $2 billion would be provided to strengthen India’s medical infrastructure and treat patients infected by the virus.

The impact of the lockdown on India’s informal sector, which includes many street vendors as well as taxi and auto drivers, will be huge, Kunal Kundu, India economist at Societe Generale, told press.

“When we talk of aggregate demand, what is important to realize is that 65% to 70% of India’s economy is unorganized,” he said. “Those are the people who would definitely be more affected, (and) even the small-and-medium enterprises.”

Kundu explained they would undergo three continuous weeks with zero cash flow as their customers stay indoors; that duration may be longer if the lockdown is extended after 21 days. Many of them would lose their wages during the lockdown and some are likely to face unemployment. He added that the federal government needs to move fast and introduce some fiscal measures that can assure money will still flow into the bank accounts of those affected individuals and small businesses.

“Because their survival depends on daily cash flows,” he said.

While most commercial and private establishments would be closed, India said that essential services such as grocery stores, banks and ATMs, gas stations, and delivery of goods purchased online would still be allowed. The finance ministry eased several rules in light of the outbreak that includes extending the date for filing taxes, local media reported.

India currently has 512 active cases of COVID-19, the respiratory illness caused by the coronavirus that was first detected in China and has since infected more than 375,400 globally and killed over 16,300, according to data from the World Health Organization.


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