Battling COVID‐19 with dysfunctional federalism
Lessons from India
Originally published in Southern Economic Journal
The Indian federation is highly centripetal, and historically, this has left states without the requisite legislative and fiscal authority to take independent action and initiate policies of significance. Consequently, India's response to the global COVID‐19 pandemic was to impose a very severe countrywide lockdown using the mandate of the Union (federal) government. This centralized one‐size‐fits‐all diktat was imposed despite high variations across states in resources, healthcare capacity, and incidence of COVID‐19 cases. We argue that India's dysfunctional federalism is the reason for the centralized lockdown, preventing state and local governments from tailoring a policy response to suit local needs. Using mobility data, we demonstrate the high variation in curtailing mobility in different states through the centralized lockdown. We find that India's centralized lockdown was at best a partial success in a handful of states, while imposing enormous economic costs even in areas where few were affected by the pandemic.