Footnote:
Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments April 10, 2020 erstellt
Description:
In a remarkable feat, India has been rather successfully observing an almost 100% lockdown over more than two weeks now, and there is an increasing speculation that the current lockdown may get extended further. While such a lockdown - and extensions of it - are imperative to arrest the spread of virus, but given the heterogeneous nature of Indian economy, the economic costs of a blanket lockdown can pile up sooner than we think, and be more acute than we can imagine. And this begets the question: is 100% lockdown too excessive for India? To address this, I ask the following: can the lockdown policy be fine-tuned to internalize the economic structure of India? The key premise is the following: At the heart of both virus transmission and economic activity is the human-to-human contact. Intuitively, the economic activities differ widely in terms of the frequency with which one has to “transact” with other economic agents. To capture this variance, I define and create a measure of “economic contact-intensity” (ECI Index) using the data available on Indian industries, at the district and industry sector level. The results suggest substantial variation across industrial sectors and the districts, and therefore highlighting an important first-order role for economic contact-intensity to be useful in rationalizing the lockdown policy. Policy implications: I propose a geographical and industry based strategic approach to effectuating the unwinding or the extensions of the lockdown policy. I identify districts and economic sectors, with a combination of lower ECI Index and higher output share which can be preferred to have a lenient lockdown without necessarily compromising on either the virus transmission or the economic output. Also, ceteris paribus, the economic costs for industrial sectors and geographical locations which are on the higher end of contact-intensity are likely to be relatively greater in the event of a lockdown. Therefore, such an identification of the low and high contact-intensity sectors (or districts) could be a useful device for policy makers, if, for instance, fiscal transfers (taxes or subsidies) are instituted in future, to partially mitigate the asymmetric cost implications of a blanket lockdown