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Macro Moves

Lockdown- A Conundrum to Survive

Created on 03 Apr 2020

Wraps up in 6 Min

Read by 3.6k people

Updated on 07 Oct 2020

Since we have entered the stage where the scenario includes vacation coupled with work from home, boredom & social distancing tagged along with social media anxiety lead by SENSEX hitting lowest circuit ever with NIFTY trading at a halt for 45 minutes, a drop in share prices, economic slowdown, the negative performance of returns, market handicapped, and this list could go on and make another eternity of recession on its own. No matter what social media says, there are chances that “LOCKDOWN” with quarantine won’t reduce the amount of fear of staying at home and feeling unsafe by interacting with people and worrying about cure available at the moment along with lives that can be saved. Let's dive into the timeline of the lockdown period.

 TIMELINE- (22nd MARCH 2020 - 15th APRIL 2020 )

On 22 March 2020, the Government of India decided to completely lockdown 82 districts in 22 states and Union Territories of the country where people are allowed to step out with masks only for procurement of essential services and commodities were allowed. 80 cities including major cities such as Bengaluru, Chennai, Delhi, Mumbai, Pune, and Kolkata were also put under lockdown till 31 March and the current scenario is said to be extended till April 15, 2020, but the news has it, the rumors that it might extend to June or even May who knows! And as citizens, we have our rights that can be exercised during this lockdown duration. Let's tip-toe around the legal awareness aspect of the lockdown. 

LEGAL ASPECTS related to lockdown

The government has issued a document consisting of guidelines that lay down section 51 to 60 of Disaster Management Act, 2005. (It includes the penalties and offenses to be faced on violation of false claim, false warning, misrepresenting information related pandemic outbreak)Section 188(Disobeying orders of the government or officials) 270 and 271 of the Indian Penal Code. A central advisory passed under the Epidemic Diseases Act, 1897 — the sole law to deal with the novel coronavirus outbreak — has to be treated as “direction” by states under Article 256 of the Constitution of India, said the official quoted earlier.

 On violation of any of the aforementioned sections, a citizen can attract a fine from 6 months up to 2 years with fine or both can be invoked for the purpose as said by MHA officials. 

Services that a citizen can avail or exercise rights during the lockdown-

  • Hospitals & medical establishments.

  • Services consisting of activities related to the delivery of essential goods, electricity, banking,(municipal bodies) sanitation, district administration and treasury, petrol pump, retail gas outlets, water supply, disaster management, telecommunication, power generation, capital and debt market, emergency services along with print and electronic media.

Services being offered but can't be accessed during lockdown-

  • Transport services.

  • Offices of the government of India.

  • All educational, training, research, coaching institutions, etc.

  • Places of worship (no religious congregation will be held).

  • Industrial establishments.

  • Social gatherings, meetings.

As we move further in the timeline let's go through its impacts-

IMPACTS OF LOCKDOWN

  • Economic Abruption- With the effect of nation-wide lockdown, the economy is spiraling at an escalating rate down to the worst recession dating way back to the 1930’s economic parallelism bringing all its activities to an unexpected halt. India being one of the developing countries with limited available resources to spend can’t expect its citizens to survive in the country shutting down the country completely. 

  • Demand & supply collision- As a measure to contain the pandemic outbreak, declaring lockdown might have given a chance to fight back from this virus and control the death rate but the economy has resulted in a frozen halt. In this duration with no business operating, the ban on transportation of goods has led the manufacturers in a dilemma to believe that they can’t escape. Suppliers have stocked resources of the required material to provide any relief or to even bring their beacon home, retailers too are finding it hard to obtain goods and to trade to citizens. All of this points towards the worst-case scenario of hiked prices at desperate times, with no penny to save but only to spend. 

  • Fluctuation in business cash flow- Cashflows consist of inflows and outflows, which marked by two sources, namely- Operational cash flows- Inflows received by the business in terms of their good and services accepted by the customer. Credit- Money obtained by borrowing from banks, suppliers, Non-Banking Financial Institutions, NBFCs, etc.

Unfavorably, during recession times or Lockdown times, operational cashflows (inflows) falls to zero. But to survive in the market, the business has to lean on their credit sources or else they’ll have to withdraw from their reserves from banks negatively resulting in disruption of money supply in the market. Each sector has its reserve to operate which varies from 27 to 47 days or even more. For small scale, it is 27 cash buffer days whereas for medium to large scale business the maximum duration raises from 27 cash buffer days to 47\60 cash buffer days. Now, with days of Lockdown, and 27 days of cash buffer period, how long can a layman rely on their reserves?

 Socio-economic hurdles: With the implementation of social distancing, the lockdown was supposed to act as a supplement, in the recovery of the pandemic outbreak, but it is resulting in mass hoarding of lock, stock, and barrel of basic amenities. The government has taken the following measures keeping in mind the issues to be resolved the government has taken the following initiatives-

Government Relief

Monetary

Though the government has declared relief to the citizen regarding payments to loans and EMI, it exactly hasn't, because while we enjoy the benefits for moratorium period, the principal amount along with the added interest will have to be paid by us resulting in draining our pockets in the forth-coming time and with fluctuating rates and hope of recovery from the recession.

 The following initiative has been taken by the govt. -

  • Below Poverty Line families will be provided relief under Mahatma Gandhi National Rural Employment Guarantee Act, and Prime Minister Garib Kalyan Scheme, where minimum wages will be increased to rs.202 per day along with 1.7 lakh crore relief package for the ones in need of immediate attention and care respectively.

  • Under Pradhan Mantri Ujjwala Yojana, beneficiaries will be provided with 3 free LPG cylinders till June.

  • Repo rates have been reduced to 4.4%, creating the lowest ever tag of repo rate reduced in history.

Shelter, food supply & transportation- By allowing officials to transport food & its distribution while banning the supply of goods and services, the government is trying to provide relief as much as possible while implementing social distancing at the same time owing to the outbreak. E-com websites have started dealing with providing essential services like Flipkart.

  • Parle G has contributed 3 crore packets to needy via govt.

  •  Delhi govt. Is providing night shelter to the poor people.

  • Home services from big local stores are being provided to ensure the safety of people and meeting their basic requirements.

  • Food packet distribution is being done to ensure no one starves of death and can survive.

  • Under the Panch Parmeshwar Scheme, a food distribution facility is being provided at night shelters. 

CONCLUSION

Unfortunately, this strategic move has jeopardized the monetary activities and it sounds like a nightmare on Elm Street. Where Elm Street represents middle-class people, nightmare represents the pandemic outbreak coupling it up with the trembling economy. Like two sides of every coin, one side being people diagnosed positive of COVID-19 remain hidden whereas another side of it being stay-at-home protocols. This lockdown won’t be able to achieve the expected results but ensures enough safety. Pity is on us because people are outsmarting their way to the roads, resulting in numerous positive cases, going by this attitude of citizens during lockdown period India doesn’t seem to recover anytime soon and if not taken seriously India will create a pandemic history where no other country can outnumber India. 

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Ayushi Upadhyay

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A Keen Learner. Tiny, brainy, and studious, this quiet one stays in her zone until she pops. And once she does, boy, are her comebacks snappy! There is no financial question that she can't answer through her magical blog-writing. 

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