Economic Survey 2020-21 explains Centre's COVID handling, reforms and focus on healthcare

Ahead of the Union Budget presentation, Chief Economic Advisor (CEA) K V Subramanian on Friday, explained how the 'humane approach' to the pandemic 'saved lives and livelihood' as India battled COVID-19, in the Annual Economic Survey 2020-2021. Stating that India's stringent lockdown helped save 37 lakh cases and 1 lakh lives, he stated that 'swift lockdowns also had no adverse effect on local economic outcomes'. The Survey estimates that the Indian economy can contract by 7.7% in the current financial year ending on March 31 and the growth could be 11% in the next financial year.

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Saving Lives and Livelihoods amidst a Once-in-a-Century Crisis

Learning from the Spanish Flu, Centre learnt intense lockdown provided a win-win strategy to save lives, and preserve livelihoods via economic recovery in the medium to long-term. India which imposed most stringent lockdown at the very onset of the pandemic - with measures like shutdowns, closure of schools and non-essential business, travel restrictions enabled flattening of the pandemic curve and, thereby, provided the necessary time to ramp up the health and testing infrastructure. As per the Survey,  India restricted the COVID-19 spread by 37 lakh cases and saved more than 1 lakh lives, while the actual cases in US are more than the estimated cases by 62.5 lakh cases.

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The Survey further revealed Uttar Pradesh, Gujarat and Bihar have restricted the case spread the best; Kerala, Telangana and Andhra Pradesh have saved the most lives; Maharashtra has underperformed the most in restricting the spread of cases and in saving lives. Fundamental strategies used were - (a) mitigation: slowing the epidemic spread by reducing R0 (b) suppression: reverse epidemic growth by reducing R0 below 1.

While the lockdown resulted in a 23.9 per cent contraction in GDP in Q1, the recovery has been a V-shaped one as seen in the 7.5 per cent decline in Q2 and the recovery across all key economic indicators, experienced a V-shaped recovery since then aided by a stable currency, comfortable current account, burgeoning forex reserves, and encouraging signs in the manufacturing sector output. The survey states the '5 T' strategy - Test, Track, Trace, Treat, Technology, helped India reached the peak in mid-September, after which rising mobility has been accompanied with lower daily new cases. The pandemic lockdowns led to local, regional, and global supply disruptions rendering a 'supply shock' leading to 'demand shock', affecting household income.

Not 'wasting a crisis', India initiated a slew of multi-sectoral supply-side structural reforms - Pradhan Mantri Garib Kalyan Yojana (PMGKY) for ensuring food security through public distribution system, direct benefit transfers to widows, pensioners and women, additional funds for MGNREGS, and debt moratoria and liquidity support for businesses. Atmanirbhar 2.0 and 3.0 helped to pump investment and consumption demand when lockdown eased. Major structural reforms launched by the Government – in agriculture markets, labour laws and definition of MSMEs – provide unparalleled opportunity to grow and prosper now and thereby contribute to job creation in the primary and secondary sectors.

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Amid the ongoing farmer-Centre stalemate over the three Farm Laws, the Survey showed the consultations held for the reforms since 2001: 

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Healthcare takes Centre Stage, Finally!

The Survey recommends the following steps to help Healthcare sector:

• Given its potential to provide healthcare access in remote areas, telemedicine needs to be harnessed to the fullest by especially investing in internet connectivity and health infrastructure. 
• In conjunction with Ayushman Bharat, the emphasis on National Health Mission should continue. 
• An increase in public spend from 1 per cent to 2.5-3 per cent of GDP – as envisaged in the National Health Policy 2017 – can decrease the Out-Of-Pocket Expenditures from 65 per cent to 30 per cent of overall healthcare spend. 
• As a bulk of the healthcare in India is provided by the private sector, it is critical for policymakers to design policies that mitigate information asymmetry in healthcare, which creates market failures and thereby renders unregulated private healthcare sub-optimal.

Currently, India continues to underperform in comparison to other Low and Lower Middle Income (LMIC) countries. On quality and access to healthcare, India was ranked 145th out of 180 countries (Global Burden of Disease Study 2016).  At 3-4  per cent, the hospitalisation rates in India are among the lowest in the world; the average for middle-income countries is 8-9  per cent and 13-17  per cent for OECD countries.  According to National Health Accounts, 2017, 66 per cent of spending on healthcare is done by the states. India ranks 179 out of 189 countries in prioritization accorded to health in its government budgets (consolidated union & state government). 

With the adoption of telemedicine by the Ministry of Health and family welfare (MoHFW) on March 25, 2020. eSanjeevani OPD (a patient-to-doctor teleconsultation system) has recorded almost a million consultations since its launch in April 2020. Focusing on long-term healthcare priorities, the Survey suggests every hospital may be equipped so that at least one ward in the hospital can be quickly modified to respond to a national health emergency while caring for the normal diseases in usual times. 

READ: Full Economic Survey 2020-21 here