The World Bank has published its biennial South Asia Economic Focus report for fall 2020 and the most current edition is titled “Beaten or Broken? Informality and Covid-19″. This comprehensive analysis includes eight countries, namely Afghanistan, Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan, and Sri Lanka. The report provides a stark warning regarding the lasting economic impact of Covid-19, especially on education.
Impact on Education
According to the study, due to the prolonged closure of schools during the pandemic, India’s future earnings could be reduced by between 420 billion USD and 600 billion USD. The reason behind this projection is that decreased students’ learning levels will probably lead to poorer productivity in the long term.
The report also suggests that approximately 5.5 million students could drop out of schools across South Asia, with a total of 391 million students unable to attend primary and secondary education because of the lockdown. These high dropout rates, along with substantial learning losses for those who remain enrolled, could cost South Asia as much as 622 billion USD in future earnings and gross domestic product.
While India is predicted to suffer the most significant loss, all countries in the region stand to lose substantial shares of their GDP. Furthermore, the projected learning loss for the region is half a year in terms of learning-adjusted years of schooling. Due to the closure of schools, not only has the learning process been disrupted, but children may have forgotten what they previously learned.
Impacts on Economy
Impact on Informal Sector
The report underscores the severe impact on businesses, consumption patterns, and social hardship inflicted on poor and vulnerable households, particularly urban migrants and informal workers in the region. It warns that the consequences could extend beyond immediate impacts.
GDP Impact
The regional GDP of South Asia is anticipated to contract by 7.7% in 2020. Furthermore, India’s Gross Domestic Product (GDP) might shrink by around 9.6% in 2020-21.
Labour Productivity
The report indicates that labour productivity may suffer significantly due to Covid-19, more so than from other recent natural disasters. Several factors contribute to this decrease in productivity, including the increased integration of the global economy, with effects on supply chains and export-import activities. Extensions to training, schooling, and education can also lead to long-term reductions in human capital and labour productivity.
Responses to the Pandemic
To combat the impact of the pandemic, the report suggests progress on three fronts: information, solidarity, and action. It emphasizes the crucial role of education in international solidarity efforts, such as debt management, stimulus packages, global humanitarian appeals, and official development assistance.
It further argues that it’s necessary to increase cooperation for the sake of children and humanity, laying the groundwork for a deeper transformation in how we invest in the world’s youngest generation. For example, India, as a lower-middle-income country, could use education as an equalizer to address its widespread socioeconomic inequalities. Steps such as increasing the educational budget in the New Education Policy and reducing the digital divide are suggested as ways to achieve this objective.
The World Bank report draws upon data from recent studies such as the UN Report on the Impact of Covid-19 on Children, which estimated that almost 24 million children could drop out or lack access to school next year, and the Global Education Monitoring Report, 2020 by UNESCO, which highlighted that the Covid-19 has exacerbated inequalities in education systems worldwide.