India’s lockdown: high stakes for Narendra Modi

“For 21 days, forget what going out means.” Indian prime minister Narendra Modi put his 1.3 billion people on lockdown last week. Officials had become alarmed that a rapid rise in cases of Covid-19 would overwhelm India’s fragile health-care system, says Abhishek Vishnoi on Bloomberg. Policymakers promised to step in with a $22.6bn spending plan, while the Reserve Bank of India has cut interest rates by 0.75% down to 4.4%. The local BSE Sensex Index still fell by 28.6%% between January and March, its worst-ever quarter.

The stakes for Modi are high, says Sadanand Dhume in The Wall Street Journal. A successful fight against Covid-19 will cement his reputation as a powerful, reforming leader. Yet a serious outbreak could trigger “widespread and unpredictable social and political upheaval”.

Narendra Modi has form when it comes to making bold announcements, notes Amy Kazmin in the Financial Times. In 2016 he invalidated 86% of the country’s currency overnight in an attempt to crack down on tax evasion, but the state was unprepared for the ensuing chaos. This time the pattern is repeating itself. The urban middle class had been advised to rely on e-commerce, but nobody told the police, who have resorted to “beating couriers making deliveries and shutting logistics warehouses”. The plight of India’s army of casual labourers, who rely on daily wages to eat, is far worse. Modi failed to explain how millions of people were supposed to get by for three weeks without work. The informal sector which employs these workers is the backbone of the Indian economy.

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On a price/earnings ratio of 18 the Indian market is now far more reasonably priced than in January. Yet given massive uncertainty about the management of the ongoing lockdown and the epidemic, it may be better to wait and see before jumping in.