Covid-19 has given Modi an opportunity to wield the power of his popularity

Our informal economy and Centre-state coordination are helpful factors, but harsh measures could leave a deep impact on society

India has some advantages in going into this challenge the world is faced with and will continue to face for the rest of 2020. The first one is that we have a government with a full majority, and a prime minister who is popular. That part of the solution to the problems created by Covid-19, which can be treated through legislation and policy, will be accessible to us relatively easily. 

The states are acting in concert with the Centre, as we can discern on the matter of the lockdown. It was first pushed by opposition-run Odisha, Punjab and Maharashtra. The Centre only had to endorse this, but the fact is that the harsh police-led lockdown is the preference of the prime minister himself. Neither he nor any senior government official has been leading the briefing on the spread of the infection (it is led by a relatively junior bureaucrat). But Mr Modi has been the communicator of the lockdown, the single biggest measure.

To complete the first point, we can politely say that the judiciary has shown reluctance to go against the government even on the protection of individual rights and on reining in majoritarianism. And so we can expect that on the governance side, things will be smooth for the Centre and it will not be hindered internally. 

Lastly, the media is on its knees and the part of it that is not enthusiastically supportive of the prime minister is also unlikely to be particularly harsh on mistakes. The economics of mainstream media in India are skewed disproportionately towards advertising over subscription. At a time like this, when marketing budgets have been obliterated, and the Centre remains the largest advertiser in South Asia (it spends more than all telecom companies combined), dissent will not be easy. 

Illustration by Binay Sinha

 

The second advantage we have is linked to the fact that our economy is to a large extent informal. Studies suggest between 85 per cent and 93 per cent of all employment is informal. Credit in these spaces is to some extent informal and elastic. It will “adjust” (in the sense that the word is used in India) to the new reality. Breaches of contract, whether written or oral, will be dealt with more flexibility than is shown in other parts of the world. 

This extends even to large parts of the formal sector and the micro, small and medium enterprises (MSMEs). The broken legal system means that few small businesses attempt to enforce debt payment and collections of outstanding through law. Taking the legal course is not productive and usually used as a last resort or where there is active hostility and not mere delay or dispute. 

The demand of formal credit for MSMEs, through means such as an unsecured overdraft for manufacturers, will be difficult to underwrite and execute for the state. This is the single most useful relief that MSMEs can have at this time. Most of the problems of the sector are linked not to profitability but to cash flow even in the absence of the present crisis, but especially so now. However, it is difficult, and perhaps impossible, for the state to order the opening up of lines of credit that it has no capacity either to fund or to manage. 

Given this, the fact that contracts are flexible will lead to some mitigation. This will not lessen suffering, and this is not to glorify an informal economy or celebrate a dysfunctional legal system. Millions will lose jobs in addition to the millions who already have. We are only counting our blessings.

Because most of the employment is of temporary workers, it may be assumed that the system is already used to quickly hooking large numbers of employers with large numbers of job seekers. The bounce-back of the unemployment numbers will, therefore, not be hindered on that count and should be healthy when restrictions are lifted. 

The challenges to the economy are unprecedented — a word that we have overused but can be deployed honestly and meaningfully today. The haemorrhaging of jobs and wealth is greater than it has ever been in our history. As we exit the lockdown and survey the remains and ruins, some of it will continue. The appearance of insecurity and discomfort in an already deeply unequal society will also continue for a substantial period of time and will leave a deep impact on society and politics. We are in a period when change will happen whether it is sought or not. 

At this time we have a leader with more political capital than almost any before him. He can spend that capital, apparently without depletion, on policies that affect us harshly and individually. In the US there is no restriction on personal travel. Even in Europe, it is almost voluntary. India has the harshest lockdown anywhere in the world, and its society with the most number of poor. It could be argued that it went into the lockdown with the least amount of preparation and anticipation as the protests by migrants are showing. But even in this period, Mr Modi’s popularity remains intact. 

We will not be hindered by the strength of our leadership. We can only hope that the choices it makes are wise and are accompanied with execution of competence. Here, the past is problematic but we will leave that for another day. 

The US presidency is described as captaining a big ship with a small rudder, meaning that any change is slow to come and individual leadership cannot make that big a difference to the state. This is not the case in India today. The present leadership can effect sweeping changes without resistance, and is enthusiastic about doing so. 

The Covid-19 pandemic has given it the opportunity to wield this power.