On March 24, 2020, in a late evening television address, PM Modi announced a nationwide shutdown from midnight of March 24-25 to combat the increasing cases of coronavirus. It was to be one of the strictest lockdowns in the world as the billion plus population of world’s largest democracy were confined to their houses. It’s one year since the lockdown, the cases are beginning to rise once again with fears of a second lockdown looming large. There might not be a second nationwide lockdown though localized lockdowns at the state and district levels cannot be ruled out. In hindsight, there is a lot much to discuss on the pros and cons of the action. Yet, what merits to be assessed is the action taken in the days of March 2020 as the world was grappling with the pandemic emergent from China. It would have to be assessed with it being rational in economic terms or otherwise. The hindsight might give indicators of it being rational or otherwise but any action has to be judged from the circumstances prevailing at the time of execution of the decision.
It’s more than a year since the Wuhan pandemic made its appearance yet there are numerous things that remain unknown. There is still no consensus on the spread. For instance, there is no clarity on whether the asymptomatic spreads exists or not. There is still not a test to determine who is a superspreader and who isn’t. In fact, analysis suggests very few are superspreaders but in absence of a marker to identify them, the type II errors are being accepted as the new normal. The precautionary principle gets into play even today with reference to isolation of the positives detected. Till such time, the markers emerge for identification of a super-spreader or not, there would be fourteen day loss at least in terms of productivity to people detected with the virus. One year hence, there is still not a mechanism to identify the rate-limiter of the virus. There is no clarity on how exhaustive is the spread of the virus in the uncontrolled circumstances. There is no evidence on immunity being conferred if recovered from the pandemic. There are cases of reinfection though they are less. There is no algorithm that would predict the severity or mortality on account of the disease. Little consensus exists on why many are able to escape with minimal damage whereas there are others who succumb to the disease. There is no mechanism to identify why some countries have escaped the worst and some are continuously ravaged.
It is important to note that these are some points still inconclusive even after more than a year of the pandemic and still a lot is being discovered. In this context, it would not be difficult to imagine the conditions one year ago. There was fear and paranoia all over. China and especially Wuhan seems to have suffered huge. The lockdown and severity of the same as the reports came in sent shock waves. The absence of clear information from China accompanied by its lack of transparency coupled with over secrecy compounded the matters. As the pandemic ravaged in Italy, it was getting clearer that the mortality rate would be high. The health care systems were likely to be burdened and this would aggravate the crisis. There seemed to be no way out of the crisis other than social distancing and masks. People to people contact would aggravate the matters. The daily news of hundreds of deaths from Italy were causing panic. There were reports of cases floating around and possible explosion of cases in US, UK and other parts of Europe. It was extremely difficult for country to help another country. The World Health Organization (WHO) had abdicated its duty by kowtowing to the Chinese line. The US administration too was failing.
In the event of pandemics or other emergencies, rather than the correctness or otherwise of the actions, it is swiftness of the action that determines the outcome. It boils down to how quick authorities react. They are operating in an environment of utter uncertainty. Decision making under uncertainty necessitates the processing of information available therein. In Bayesian terms, it is the information available at that moment determines the decision. As more information flows in, the decisions are modified accordingly. Today, India might not be prone to national lockdown because there is more information available about the epidemic than it was a year ago. Therefore, it was without surprise that the Indian government decided to go in for a hard lockdown. The only precedents were Italy and China and both had gone for a lockdown and hence India to avoid the worst needed to do so. As more information accumulated, the health infrastructure accounted for, the country began to open up step by step. There might be question marks on the pace of the unlock but in Bayesian terms, the more information as one obtained, the probabilities changed for different scenarios and thus the decision making was sought to be reflected to meet these changed landscapes.
It is thus one would merit a discussion on the rationality of the act. Rational actions in economics implies the evaluation of costs and benefits before a decision is taken. Cost-benefit analysis will have to consider all possibilities, yet the amount of information that is available is limited. Therefore, it is in the framework of available information that the actions are undertaken. In the context of India on the eve of the lockdown, the available information on the pandemic was the factor that would have gone into the decision making. As the information becomes available, the changes are done and thus again reflect rational action. Rationality, again it must be stressed is not perfect evaluation of alternatives and opportunity costs. It is not about the information being symmetric across players. It is about access and availability of information and decision taking within those constraints. It is the output or utility maximization subject to informational constraints. As these constraints ease, there would be natural shifting of the rational equilibrium. Therefore, while hindsight might reveal numerous factors, the decision to lockdown given the constraints was rational to borrow from economics.
Thoughts on Theory and Practice 