In the three years before the pandemic, South Asia registered the world’s highest rate of economic growth. Now, as a ruinous second wave of Covid-19 sweeps through the region, all of that appears to be undone.
In the three years before the pandemic, South Asia registered the world’s highest rate of economic growth. Now, as a ruinous second wave of Covid-19 sweeps through the region, all of that appears to be undone.
Sagar Prasai (00:03):
It's like death by a thousand cuts. You can probably survive the first onslaught, but this onslaught, I think everybody's down.
John Rieger (00:11):
A second wave of COVID-19 threatens to swamp South Asia's economies. Today on InAsia, from the Asia Foundation. I'm John Rieger.
Tracie Yang (00:18):
And I'm Tracie Yang. Back in January, writes today's guest, COVID-19 in South Asia was at its lowest in months and economic prospects were improving. Today, a second wave is sweeping the region, and one in three new infections worldwide are in India alone. In the three years before the pandemic, South Asia registered the world's highest rate of economic growth. Now, all that appears to be undone.
John Rieger (00:44):
Joining us now is Sagar Prasai and advisor to the Asia foundation in Nepal and our former country representative in India. He's the principal author of a new Rapid Assessment of the impact of COVID-19 on employment in Nepal. Sagar Prasai,
John Rieger (00:58):
Welcome to InAsia.
John Rieger (01:01):
When you last wrote for us back in May, some 200,000 Nepalese workers with no way to survive under Nepal's sudden lockdown, had left the cities and simply started walking home. Catch us up a little bit on that history.
Sagar Prasai (01:14):
Yeah. So the infections in this part of the world surfaced around March and there was quite a reaction from the government in South Asia. There was a lockdowns announced in India with very little notice - in fact, four hours notice. In Nepal, we were given about thirty hours notice. Most of the workers who work on daily wages come from outside of the city. Many of the factories were shutting down. There wasn't enough prospect of an income and in a mode of panic, they decided to leave. But then of course the country was in lockdown. So, most workers decided to walk home.
John Rieger (01:56):
And yet by January, South Asia seemed ready to bounce back according to your essay in this week's blog.
Sagar Prasai (02:03):
Absolutely. In fact, there was a prediction by a government community in India that by February, the COVID infections would completely subside. Such was the optimism, and with vaccines available, and case loads very low, everybody thought and felt it was over, and not only the government, the people let their guards down. And so we suddenly are in this mess.
Tracie Yang (02:28):
What are the implications of this second wave of infections for poverty in the region?
Sagar Prasai (02:34):
This very severe.
Sagar Prasai (02:35):
I mean, I was talking to an economist in India and he was saying it's like death by a thousand cuts in the sense that you can probably survive the first onslaught, but compared to what happened in the first wave, the second wave is dramatically different in terms of numbers. Just to give you a sense, in India, their peak on a daily basis was around 100,000. Now they've crossed 300,000 infections per day, and there are models suggesting that it could, by May, it could be 500,000 infections a day. So, what happens at a time like this is first, of course, there is panic in society and panic and industry and panic everywhere. Production halts, banks begin to feel the itch, so to speak because their borrowers are not economically active. And so they panic a little bit and you know, there will be layoffs and furloughs and so on and so forth. And beyond this point, the private sector is depleted. It sort of scathed through in the first peak and was beginning to sort of stand on its feet. With this onslaught, I think everybody's down.
Tracie Yang (03:48):
So then can businesses recover when the lockdown ends without government help?
Sagar Prasai (03:54):
It will be difficult and here's the big issue in the end. The difference between developed economies and developing economies. Particularly, economies that have sovereign control over how much money they can print. Economists on the sidelines have been warning the governments that you can't print money and get out of the crisis. That is a solution, but not a very wise one, but nonetheless, there's nothing else you can do when, when the private sector is as weak as it is, you have to pump in money. And more than private sector, more than supply side, there is no demand. I mean, there've been income losses, job losses. So they also stopped consuming individual households, stop consuming, and start saving. So that really puts the economy in a downward spiral until somebody injects cash.
John Rieger (04:48):
Here, United States, President Biden's COVID recovery plan has a trillion dollar plus price tag. Is that possible in South Asia?
Sagar Prasai (04:56):
No, and that is why there is a lot of reticence in trying to do that because what will happen is you print a lot of money and then it increases the circulation of money, but then it cheapens the money, right? There is inflation and sort of the specter of inflation hanging out there. And so what inflation typically does is makes the poor people even poorer, right? So it is a bind. It's a catch 22 situation. This is new to the world, economic disruption of this kind, that took global hasn't happened, not in first world war, not in second world war, not in the financial crisis, never.
Tracie Yang (05:40):
A crisis like COVID-19 can often reveal systemic problems that would otherwise go unnoticed. Has the pandemic revealed anything like that in Nepal?
Sagar Prasai (05:54):
It has, Nepal at around 1,150 dollars per capita income. At this stage of development, health services are usually weak. In the previous peak though 40,000 active infections. And the health system could endure or manage 40,000 infections. Now, by a stretch, if the second wave brings up to 50, 55,000 cases, Nepal might still be able to manage, but it will begin to see similar images as you seeing from India.
John Rieger (06:32):
What sort of images do you mean?
Sagar Prasai (06:33):
For those who've been following the story in India, there is an shortage of oxygen, you have to wait three to seven days for test results to come back because it's such a overload of people testing.
John Rieger (06:45):
That's basically useless.
Sagar Prasai (06:47):
Cremation grounds are full, and they're cremating bodies and footpaths, the sidewalks. So these are horrendous image. It's very difficult to watch. That kind of situation in Nepal cannot be ruled out at this point.
Tracie Yang (07:03):
I wanted to go back quickly to the Rapid Assessment and pointing out that you made an interesting recommendation about good data. Can you talk about that a little bit?
Sagar Prasai (07:16):
Absolutely. When the country doesn't have enough resources, data tends to be low priority investment. And in Nepal, it is very difficult to get data, even employment data. If I am to talk about what is the current level of employment in Nepal? I have to go back and look at 2018 data. We know that certain sections of the society has suffered more than others. If we had data, we could figure out where is the geography concentration of the people who are suffering most, which demographies suffering most, which gender is suffering most and the government relief packages and programs could be targeted to them. But in the absence of data, it is all straight jacket. Right now, for instance, in the India, for the month of May and June, they are distributing grain. Five kgs of grain for free, for the poor. And as many as 800 million Indians are eligible for that.
John Rieger (08:16):
That's a lot of grain. [crosstalk 00:08:20]
Sagar Prasai (08:20):
That's a lot of grain, but that also suggests it's a blunt instrument. You're not really targeting the poor. You just have to do that way.
Tracie Yang (08:26):
Hmm.
John Rieger (08:27):
So did your Rapid Assessment fill any of these gaps?
Sagar Prasai (08:30):
Unfortunately, we knew conducted a Rapid Assessment. It is by research standards, you could call it a quick and dirty effort. So, being an author of a Rapid Assessment, I can only make noise. I can't be very confident of my claims.
John Rieger (08:48):
Having done this Rapid Assessment, what were the flashing lights that you saw up ahead?
Sagar Prasai (08:53):
If I may, I want to sort of posit a sort of a longer theory around this. You know, we look at a health crisis like this and we see the system sort of either breaking or about to break. And we think of this as a health sector issue. But, by the time you begin to see countries grappling with oxygen, you know that that is not just a health crisis, there is a governance crisis. That's because it's a failure to plan, failure to allocate resource in the right places. It is the failure of the bureaucratic machinery to act quick enough. And all of them can be understood within the rubric of governance, managing, governing the health sector. For a long time, Organizations like us need to focus on the clinical side or the resource side: vaccines, medicines, and so on and so forth. And, a crisis like this has revealed that yeah, that is important, but more important is how you manage. So that's where we are.
Tracie Yang (10:01):
Sagar Prasai, thank you for being with us today.
Sagar Prasai (10:05):
Thank you for having me.
John Rieger (10:06):
That's our show for this week. Sagar has further thoughts about COVID and the economies of South Asia in this weeks in Asia blog.
Tracie Yang (10:12):
And while you're there, why not subscribe to our podcast? You'll never miss an episode. Until next time, I'm Tracie Yang.
John Rieger (10:19):
And I'm John Rieger.
Tracie Yang (10:20):
Thanks for listening.