COVID-19: Study estimates Rs 80,000 cr loss to Kerala economy

The study -- titled "Quick Assessment of the Impact of the Covid-19 Pandemic and Lockdown on Kerala's Economy" -- was undertaken after Chief Minister Pinarayi Vijayan asked the Board to make a quick assessment of the state's losses, particularly to the sectors most vulnerable to the impact of Covid-19 crisis.

The study pertains to the period between March 25 and May 3, 2020.

"For March 2020, assuming about 10 days of total production loss and decreased economic activity from the middle of March, we estimate the shortfall in value addition in the state to be roughly Rs 29,000 crore.

"For the first quarter of 2020-21, the entire month of April is affected, with near total disruption in economic activity. It is expected that many of these would continue in May and subsequent months. This will mean a loss of roughly Rs 80,000 crore in the first quarter (of the fiscal), assuming the normal production level in 2020-21 to be about 5 per cent higher than in 2019-20," says the study.

Daily wage losses by self-employed and casual workers in Kerala for the lockdown study period is in the range of Rs 14,000 crore to Rs 15,000 crore.

When it came to the shortfalls in Gross Value Added in the manufacturing sector from trade, hotels and restaurants it has been estimated to be around Rs 17,000 crore.

The total losses in agriculture sector, including plantation crops, are estimated at Rs 1,570.75 crore.

The losses for agricultural labourers due to loss of wages is estimated at about Rs 200.30 crore.

The report points out that the state should learn from the pandemic and work towards reducing its dependence on other states for food and food crops. With regard to rice cultivation, fallow wetlands must be identified across the State and cultivation entrusted to joint liability groups.

"An area of 25,000 hectares should be newly brought under paddy cultivation in the next two years. Vegetable production has increased commendably over the last few years and production doubled. However, we can undertake one more doubling exercise in vegetable production in the state in the next three to four years. Special measures have to be undertaken to ensure this. All available spaces in rural and urban areas should be utilised for this initiative," says the report.

It also suggests that animal husbandry should be strengthened to attain greater degree of self-sufficiency in commodities like eggs and meat.

"Kerala has to aim to reduce dependency on other states for egg supplies to just about 25 lakh eggs per day. We need to produce at least an additional 75 lakh eggs per day in the state. The "Kerala Chicken" scheme needs to be expanded over the next five years. A scheme to encourage rearing of male calves should also be thought of in this regard."

Likewise, the total losses in the fisheries sector is estimated at Rs 1,371 crore. the study points out that the central government needs to consider a comprehensive economic package for the fisheries sector.

The study finds that the money-spinning Kerala tourism, which yields an annual income of Rs 45,000 crore, will lose about Rs 20,000 crore in 2020-21.

In the IT sector, the total decline in earnings is estimated to be Rs 4,500 crore in the first three quarters of 2020-21.

It also expects a job loss of around 26,236, while 80,000 indirect job losses in services, transportation, hotels, cleaning and security sectors is also foreseen.

The total loss in terms of remittances to the state in January-February 2020 is estimated to be Rs 2,399.97 crore.

It points out that the economic crisis associated with the coronavirus scare is unprecedented. The production of goods and services came to an abrupt and almost total halt.

Further, the halt to production during the corona crisis is not locality- or scale-specific. Its effects are from top to bottom and across all locations.

"There is uncertainty over the period it will take to resume production after the crisis is over. There is also uncertainty about how long it will take to achieve previous levels of production. This is because the resumption of production involves national and international supply and distribution chains," the study says.