COVID-19 and Political Economy in South Asia

The novel coronavirus – deemed COVID-19 – has caused unprecedented harm to South Asian countries and has significantly affected global migrtation. Economies are reeling from border closures, societies have become plagued by social distancing measures, and the political economy is faltering from diverging perceptions vis-à-vis the virus. Even as health risks are mitigated somewhat by social distancing guidelines and access to health care, Johns Hopkins reports 667,957 cases in Pakistan, 12,149,335 in India, and 611,295 cases in Bangladesh. The economic costs have spanned a retrenchment in GDP to higher rates of poverty threatening huge swathes of the informal sector as well as falling educational outcomes.

The disconnection between official channels of communication and misinformation is increasing globally, and this has lessened the ability of policymakers in South Asia to convey information to the highly politicized citizenry.

Whilst the UNHCR initially placed Pakistan’s health care needs at $9.8 million, international donations to Pakistan crossed $6.8 million, including major donations from the U.S. and Japan. Despite increasing its contribution to the U.N. from 1 to $12 million in the last decade, China has refrained from using direct channels to support its ailing partner. However, China did gift Pakistan 1.2 million COVID vaccine doses.  This denotes not only the economic-nature of the Chinese-Pakistan relationship but also suggests Japan’s quest to pursue regional stability, even as the U.S. seeks to ensure that its multifaceted relationship – spanning counterterrorism, investment, and trade – persists. 

Moreover, China’s refusal to back Pakistan in the FATF scenario also sent alarm bells ringing. The lack of monetary support may lead to Pakistan being less willing to acquiesce to China in the long run, even though any resistance to Chinese impositions in the Regional Comprehensive Economic Partnership (RCEP) could be met with threats to withdraw complete financial support. Pakistan’s current linkages with China suggest a need to diversify its relationships in the medium term.

COVID-19 has shown how India’s large informal sector can impede economic development, even as the country seeks to diversify and enhance productivity across its economy. However, at the risk of overemphasizing the economic fallout from the virus, a renewed push for investment in health care systems will be a natural conclusion to months of lockdown and the loss of life. While it imports nearly 80% of its medical devices, particularly higher-end products that include cancer diagnostics, medical imaging, ultrasonic scans, and PCR technologies; this could come to reinforce its geostrategic relationships with advanced economies. 

An emerging challenge to the post-COVID economic structures is civil liberties that are increasingly fragile under the Modi regime. Since the virus latched on across the country, over a million Indians resorted to downloading an app “Aarogya Setu” despite no meaningful data privacy or anti-surveillance laws. Meanwhile, India continues to use the 1885 Telegraph Act, which allows it to intercept any calls to “protect national interests” – and under the same banner, can now further control the media and civil liberties across previously independent regions like Jammu and Kashmir.

Recent experience from the advanced economies has shown that the nefarious uses of digital and nudge technologies have exacerbated polarisation in the political discourse. However, citizens, in the near term, appear more concerned about health outcomes over individual freedoms; a trend that will only be reversed by impropriety in data handling in the oldest democracy. Meanwhile, a YouGov poll shows that 45% of Indians are worried about job losses as the economy reopens while an even greater number are worried about children’s education that has been blighted by COVID-19. 

Less than half of Indians are worried about falling sick or dying, which explains the slower take-up of the coronavirus app. India’s educational outcomes will determine how competitive its economy would be in the long run. As Modi argues for better trade agreements with the U.S. and greater market access for its citizens and its entrepreneurs to Britain, its economy hinges on providing higher value-added products with its trade partners.

Whilst uncertainty will likely persist over India’s approach to Jammu and Kashmir, international criticisms will likely remain muted as there is no global consensus on data management for the information collected from citizens around the world amidst government-created apps to manage the spread of the virus. Meanwhile, political outcomes are increasingly uncertain following COVID-19 and the ruling Bharatiya party, as the electorate will likely judge the ruling party on its response to COVID-19, its public health infrastructure, and the state of the Indian economy. 

Like most South Asian nations, Bangladesh has been adversely affected by the COVID-19. As its economy reels from the negative spillovers from the virus, it will continue to integrate South Asia gradually, as it seeks to develop manufacturing after the virus recedes. For decades, Bangladesh-India relations were blemished “by the question of a comprehensive settlement of the land boundary between both countries, an important aspect of which included facilitating the belated exchange of border enclaves.” The 2015 land boundary agreement will serve for greater diplomatic, economic, and securities ties.

Bangladesh ranks quite low in terms of life expectancy, school completion rates, and gender equity, and whilst COVID-19 has illustrated mutual dependency with its partners, a slower pace of growth globally suggests that economic and social liberalism might occur in sync. By no means does this renege the people from their values: it will enable them to trade in a manner that facilitates cross-border learning.

For countries like Bangladesh with net enrolment rate at the primary school level at 80% in 2000 to 98% in 2015, and secondary school net enrolment at 54%, up from 45% in 2000; facilitating trade with other countries will enable it to benefit from skills and knowledge transfers over the long run. If the aforementioned indexes are anything to go by, Bangladesh will see its infrastructure develop at a faster pace, whilst transmissions from trade will cause the workforce to become increasingly skilled. 

COVID-19 has had devastating effects on health outcomes across South Asia. Even as the economic costs cannot be understated, educational outcomes, security relationships, and implications of the government’s response for civil liberties will drive future election outcomes, and determine the rate of development (in less advanced South Asian nations such as Bangladesh and Pakistan). The results could be predicted from a perusal of the heterogeneity in domestic outcomes, driven, in part, by local needs and different approaches to domestic and foreign policy.