With its economic health in the doldrums, Modi is lifting restrictions – as the death toll mounts.

In a bid to open up more of the economy while continuing to clamp down on Covid-19 hotspots, the Indian government hopes to alleviate the economic impact of the world’s largest social distancing exercise, which has crippled business activity and left millions unemployed.

Domestic flights resumed on Monday as some travel restrictions were eased. However, around 630 flights were cancelled amid chaos as many states withdrew from accepting flights after initially agreeing.

This came on the heels of nearly 7,000 new virus infections reported on Sunday, the country’s largest single-day increase to date.

Since Prime Minister Narendra Modi ordered 1.4 billion Indians to stay-at-home on March 24, there have been more than 150,000 infections, with active cases numbering 78,000 and steadily rising. More than 4,300 people have died.

The devastating consequences of cyclone Amphan have added little respite in the last week.

While the Indian economy was sluggish before the pandemic struck, lockdown-induced measures have hammered it to the brink of depression, as dire forecasts point toward prolonged cycles of economic contraction.

As the country emerges from a stringent two-month lockdown period, the government faces a pressing dilemma: can it reduce transmission of the virus and simultaneously resuscitate its staggering economy?

Public health vulnerabilities

The climb in cases only puts further strain on India’s chronically underfunded health infrastructure. India only spends 1.5 percent of its GDP on public health, amongst the lowest in the world.

With public hospitals routinely overstrained, private hospitals have picked up the slack, but they too are at risk of being under-resourced and overrun with cases.

According to the latest data from the Organisation for Economic Co-operation and Development (OECD), India has only 0.5 beds per 1,000 people. By contrast, China has 4.3 beds per 1,000 people.

There are not only bed shortages but medical staff too. Those treating patients are increasingly overburdened and without adequate protective gear.

“In our country, healthcare has never gotten priority,” said Dr. Adarsh Pratap Singh, the head at New Delhi’s top public hospital, the All India Institute of Medical Sciences. “The government is now realising the reality, but it’s already too late.”

Brewing economic disaster

While India’s draconian lockdown may not have flattened the infection curve, it has flattened the economic growth curve.

Imposed with just four hours’ notice, the lockdown immediately spawned a humanitarian disaster as millions of migrant workers were left stranded across cities without work.

The Centre for Monitoring Indian Economy (CMIE) pointed to a “jobs bloodbath” between the months of March and April, which saw a total of 122 million job losses. Around 120 million are estimated to be on the verge of being pushed back into poverty.

Most economic indicators followed suit: consumer demand evaporated, investment dried up, exports collapsed, trade shrunk, the aviation industry and automakers slumped.

Yamini Aiyar, CEO of the Centre for Policy Research, argued in the Hindustan Times that “the lockdown has exposed fault lines in society, and the extreme vulnerabilities of most Indians.”

With the country reeling, Modi unveiled a relief package of $265 billion on May 12 to help weather the fallout of the pandemic. 

Amounting to 10 percent of GDP, the government aims to revive the economy with a slew of fiscal stimulus directives and sectoral reforms.

Aiyar cautioned that “reforms are necessary but, first, India needs to repair as an economy, a society and a democracy.”

Given the scale and severity of the crisis at hand, the present bailout might not be enough.

According to a report by CRISIL, it predicts that Asia’s third-largest economy would shrink by 5 percent in the current fiscal year, adding that India must brace for its “4th and perhaps worst recession to date” whereby “about 10 percent of GDP in real terms could be permanently lost.”

“Not only will the first quarter be a washout for the non-agricultural economy, services such as education, and travel and tourism among others could continue to see a big hit in the quarters to come. Jobs and incomes will see extended losses as these sectors are large employers,” the report added.

In his most recent address, Modi made no mention of containing the virus nor flattening the curve. Instead, he urged Indians to learn to adapt to their new reality.

“Corona will remain part of our lives for a long time,” he said. “But we cannot allow our lives to be confined only around corona.”