Lockdown hits middle class hard into extreme poverty

With cases around the world increasing every day and showing no downward sign, the fear, the uncertainty and the questions surround our minds as to how is it going to shape up in the coming days.

The COVID-19 alarm is buzzing more than anyone would have wanted it to. With cases around the world increasing every day and showing no downward sign, the fear, the uncertainty and the questions surround our minds as to how is it going to shape up in the coming days. Having witnessed the countries with the best medical facilities in this world succumb to this deadly virus, we can simply pray that a developing country like ours, with a population of one thirty crores, and good healthcare accessible to only a few, survive this pandemic somehow.

As the news of theCOVID-19 virus emerged in China in December 2019, little did we know that this would be soon declared a ‘Global Pandemic’ by the World Health Organization (WHO). Ever since, countries have closed their borders, enforced strict social isolation and quarantine procedures, and increased testing for the virus. Travelling has almost ceased worldwide. Businesses have shut down and economies are at the verge of collapsing.

India has witnessed the biggest lockdown ever. As many as 1.3 billion people have been confined to their homes in an attempt to halt the spread of corona virus.

The most affected people in this unforeseen last few month of lockdowns, have been those who live and work in the low and middle-income strata of the society. As the single red dot on the world map morphed into red dots in almost every country of the world, the enormity of the problems facing this section of people in almost all the countries, became evidentwith serious economic and health resource challenges.

In many countries the direct impact of COVID-19 is much smaller than the impact of the lockdowns – it is now becoming an economic and a social crisis, not just a health crisis. The middle-class society may shrink in size as the world battles the biggest health scare in a century. The tax-paying, quick-footed, clever and sometimes crooked salaried middle-class keeps the giant machine of the economy moving.

Many organizations took swift action by advising many staff to work from home. Schools and colleges were shut and started taking online classes.

The disaster has become so dire so quickly owing, in part, to the legacy of the 2008 financial crisis. Minimum wage, in real terms, is more than forty per cent lower than it was fifty years ago. Meanwhile, housing costs have more than doubled since 2000. When people say they are living ‘pay check to paycheck’, it’s not that they’re managing their money poorly. Instead, their housing costs are taking up a disproportionate share of their incomes. The result is a slim margin of error: majority of Indians don’t have their savings to spare in an emergency, and would need to rely on credit cards, health insurance or friends and family to come up with the money. We know for low-wage workers, three unpaid days away from a job threatens their ability to buy food or take care of their good health.

This is worser and weirder than anything anyone ever seen. We know how to wrap our brains around the bursting of an asset bubble amid yield hunt debt in the housing market, or the end of the dot-com boom. But we don’t have practice in dealing with the fallout from this pandemic. We are beginning to see who will be most affected by the economic downturn. The crisis has also been increasing racial economic disparities and the migrant workers who were working service-industry jobs - in restaurants, bars, hotels, malls and constructions - and this sector was the first to shut down, and the least likely to fully reopen in the near future. We have seen this during recessions, but this one is likely to be worse.

It will not be possible to go back to business as usual. At the same time there is a potential opportunity for reforms that are not only necessitated by the crisis but enabled by it as well.

How should India’s policy makers respond to the economic distress? In the current global crisis due to the rapid spread of the COVID-19 virus, it is now more evident that migrant workers in the cities are the most vulnerable and the worst hit. They have to deal with triple jeopardy now: first, the grave threat of the coronavirus pandemic, second, the heartless neglect of civil society, and finally the hard and disciplinary measures of the state that has rendered them unemployed, hungry and homeless.

We need to eventually open up. Cases will come up and we will build herd immunity. Can India afford to experiment with a different way to deal with the COVID-19 pandemic? Lockdown is not the only way to deal with this pandemic. A rethink is required in the strategy to counter the pandemic in the country considering the economic loss it entails, including the loss of livelihoods. Is there an alternative strategy?

This is how life with coronavirus will play out over the next year. It's likely that the coronavirus will loom over us until we have an effective vaccine. We need to prepare ourselves for life to be really strange for a long, long time. In the midst of this crisis, well-resourced government in Central or State and organizations should remember the needs of those less well-off. Economies will be devastated all over the world. This is the time to consider debt erasure for most in need. Much more funds will be needed now and in the foreseeable future.

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