In parts 1 and 2 of this article, we have discussed the spread of the COVID-19 pandemic, preparedness (in terms of health infrastructure), and the government’s public health responses to the pandemic in four South Asian countries. In this concluding part, we discuss two issues: government economic policies and the politics that is shaping the response to the pandemic in these four countries.
There are two components of the economic response to the COVID-19 outbreak: health care spending to build infrastructure (like hospitals, hospital beds, quarantine facilities), procure equipment (like ICU equipment, ventilators) and prepare staff to deal with the pandemic; and expenditures to mitigate economic effects of physical distancing policies adopted to slow down the spread of the novel coronavirus that causes COVID-19. Using data from media reports and from the IMF COVID-19 Policy Tracker, we now present a summary account of the economic measures adopted in the four big South Asian countries.
On the healthcare side, Bangladesh has so far not devoted much resources. On March 11, the Ministry of Finance increased allocation of $29 million (0.008 % of GDP) to the Health Services Division to support an expansion of healthcare spending. It is to be noted that this is not new budgetary allocation, but only a rerouting of existing expenditure.
Bangladesh’s expenditure on the economic side has been modest too. On March 31, the government announced a stimulus plan of 50 billion taka for exporting industries. The government has also expanded existing transfer programs, for instance those that will make subsidised food available to the poor. On April 15, Prime Minister Hasina announced additional measures: a 21.3 billion taka plan to support the homeless, 7.6 billion taka for those who have lost their jobs due to the pandemic, 7.5 billion taka for a health insurance scheme for government employees most at risk, and a 1 billion taka package to pay bonus to government doctors. Taken together, the total stimulus package is valued at 87.4 billion taka and is worth about 0.34% of GDP (in 2018-19).
Expenditure on the health care side has been modest in India as well. On April 9, the Central government approved a 150 billion rupees package (0.1% of GDP) for states and Union territories to build health care infrastructure. Prime Minister Modi has also set up a fund for fighting COVID-19 called PM-CARES and has invited donations for all over the country and the world. While 2000 crore rupees (0.01% of GDP) from this fund has been earmarked for purchasing ventilators, critics point to lack of transparency in its operations.
Expenditure on the economic side – announced through two stimulus packages – of the crisis is equally small. The first package was announced on March 26 and the details of a second package was made available between May 13 and May 17.
The main components of the stimulus package are in-kind transfer of food and cooking gas, paltry cash transfers to lower-income households, insurance coverage for workers in the healthcare sector, some credit support to the micro, small and medium enterprises (MSME) sector, and wage support to low-wage workers. Taken together the total stimulus package amounts to about 1.1% of GDP. In addition, different state governments have announced their own stimulus measures, which together, account for about 0.2% of GDP. Summing up the federal and state-level responses, India’s stimulus package amounts to a fiscal support of about 1.3% of GDP to deal with the economic crisis related to the pandemic.
The second stimulus package, which was announced by the Prime Minister on May 12 and details of which were laid out over the next five days by the finance minister, entailed a much smaller demand boost than was thought at first. The prime minister’s announcement on May 12 had raised expectations because it threw up a figure that was over 10% of GDP. Therefore, readers might be surprised to see our estimate of India’s COVID-19 fiscal stimulus at only 1.3% of GDP.
The difference between the figure contained in the PM’s announcement, i.e. 10% of GDP, and our estimate comes from three sources. His announcement included liquidity injections by the Reserve Bank – which is not part of fiscal policy. Both packages frontloaded already budgeted expenditures – which is just renaming existing budgetary allocations. Finally, most importantly, many expenditure items in the second package relate only to the medium run – they will have very little effect on aggregate demand in the short run. Once these aspects of the two packages are taken into account, the actual fiscal stimulus, relevant right now, turns out to be just 1.3% of GDP. It is striking that despite the mounting evidence of the worsening situation of migrant workers, there are no measures in this package to provide immediate relief to them.
Expenditure on the health side in Pakistan is slightly lower than in India. An amount of 25 billion PKR (0.07% of GDP) has been earmarked for purchasing equipment to deal with the pandemic. In addition, import duties on emergency health equipment has been eliminated. But the fiscal cost of this latter measure is not yet clear.
Pakistan’s expenditure on the economic side of the crisis is the largest among the four countries. A relief package was announced on March 24 worth 1.2 trillion PKR. Since Pakistan’s nominal GDP in 2018-19 was 35.95 trillion PKR, the stimulus package is valued at about 3.34% of GDP. The main components of the package are financial support to daily wage earners, cash transfers to low-income families, accelerated procurement of wheat, relief in fuel prices, support for health and food supplies, and financial support for small and medium enterprises.
The expenditure on the health care side of the crisis is comparable to India and Pakistan. The government has allocated up to 0.1% of GDP for quarantine and other containment measures. The government has also donated 0.01% of GDP to the SAARC COVID-19 emergency fund. Much like in India, the president has also established a special fund for containment, mitigation and social welfare and invited tax-free donations.
The expenditure on the economic side has been relatively low. Cash transfers worth 0.1% of GDP to the poor and vulnerable population groups have been planned. In addition, the government has adopted other supporting measures: extension of tax payment deadlines has been announced; price ceilings have been set up for essential food items; and concessional loans and food allowances to low income consumers have been provided.
All the four countries have devoted relatively small amounts of funds to directly deal with the health-related aspects of the pandemic. Bangladesh has the lowest expenditure on this count, at 0.01% of GDP. The other three countries have earmarked similar amounts of funds relative to their economic size – about 0.1% of GDP. Expenditure to deal with the economic fallout of the pandemic is largest in Pakistan – at 3.34% of GDP. Sri Lanka has so far devoted the lowest on this count – at 0.1% of GDP. Bangladesh and India fall in between, with 0.34% and 1.3% of GDP, respectively.
Taking account of population size
Before we present our overall assessment of the four countries response to the COVID-19 pandemic, we want to discuss one issue. In the first part of our article, where we had discussed the spread of the pandemic in these countries, we had only presented case counts. Since the countries are very different in terms of population size, it is important to take that into account – for a more comprehensive picture of the pandemic’s spread and effect.
Figure 1 and 2 summarize key aspects of the spread of the pandemic and its effects after taking account of population sizes of the four countries. In Figure 1, we plot the logarithm of total COVID-19 case count per million population; in Figure 2, we plot the total COVID-19 deaths per million population.
From Figure 1 we see that, in terms of total cases per million population at similar points in the epidemic cycle, Bangladesh is the worst, followed by Pakistan, Sri Lanka and India. The slope of the curve is lowest for Sri Lanka, suggesting the slowest growth of cases. On the other hand, Bangladesh, India and Pakistan seem to have a much higher slopes.
Turning to total deaths per million population at similar points in the epidemic cycle, we see in Figure 2 that Bangladesh is the again the worst performer. It is followed by Pakistan and India. Sri Lanka is by far the best performer since day 40 of the epidemic, i.e since each country’s total case count crossed 50.
Relative performance record
Based on the study of these four South Asian countries, our overall assessment is that Sri Lanka is by far the best performer. It is more difficult to rank the other three countries. If we use raw case counts and death rates (deaths per 100 confirmed cases), then India is the worst performer; if we use case counts and deaths per million population, then Bangladesh is the worst performer. In both cases, Pakistan falls in between.
Sri Lanka was the best prepared in terms of infrastructure. It also was the most proactive in taking steps to contain the pandemic early on. The early and effective public health interventions by the government has managed to deal with the pandemic in an exemplary manner. One way to highlight this is to note that Sri Lanka has the lowest COVID-19 death rate, at around 1% of total cases (and 0.42 deaths per million population), despite having a relatively older population (while 10% of Sri Lanka’s population is over the age of 65, the corresponding proportion is only 4-5% in the other three countries).
Bangladesh was the least prepared to deal with the pandemic in terms of infrastructure. The government did intervene early on, but its response in terms of testing, and the stimulus package has been poorest. Using case count and death rate data that is normalized by population size, Bangladesh has the worst performance among the four South Asian countries we have studied. A large part of the explanation must surely be that it is the poorest of the four countries.
A common concern about Bangladesh and Sri Lanka relates to the size of their stimulus packages. The relatively small stimulus package, especially in Sri Lanka, might hamper the post-pandemic economic recovery.
The performance of India and Pakistan falls in between those of Sri Lanka and Bangladesh. If we use case count and death rate data, India is the worst performer, and Pakistan does relatively better. But if we use case count and deaths per million population, India performs better than Pakistan (and also Bangladesh). On the economic front, Pakistan clearly outperforms the other three countries, including India. The size of the COVID-19 stimulus package is by far the largest in Pakistan, at 3.4% of GDP, and is significantly larger than the corresponding stimulus in India, which stands at about 1.3% of GDP.
Politics shapes pandemic response
A study of the pandemic would be incomplete if we did not look at the political dimension of the crisis. In each of these four countries, the response of the state to the pandemic has been shaped by long standing and underlying political faultlines.
In both Bangladesh and Pakistan, the relationship of the State to the dominant religion has impacted the former’s ability to enforce necessary physical distancing measures. In Sri Lanka, which has seen the best public health response to the pandemic, civil society activists worry about the growing role of the military in society.
In India, the response to the pandemic has highlighted the grossly anti-working class orientation of the ruling party and the State (which has dealt most callously, in the wake of the lockdown, with the problems of the migrant and informal sector workers). The unplanned announcement of lockdown has created severe hardships for migrant workers, leaving them without any sources of income or means to return to their homes. The pandemic situation has also brought to the fore the continued hold of right-wing Hindu nationalism – the most serious threat to a democratic and secular India – on India’s political life.
The state in India has been using the pandemic to crush dissent. Alongside, the Hindu nationalist forces with active support of mainstream media and members of the ruling party have systematically demonized Muslims, holding them responsible for the spread of the pandemic and giving out open calls for their economic and social boycotts. The anti-poor and anti-Muslim politics of Hindutva has certainly overshadowed India’s response to the pandemic. In general, the COVID-19 situation has tightened the grip of regressive forces in all four countries and has posed new challenges for democracy and social justice.
(Deepankar Basu is Associate Professor in the Department of Economics, University of Massachusetts Amherst; Priyanka Srivastava is Associate Professor in the Department of History, University of Massachusetts Amherst.)