World Bank said that success of the model stemmed from a combination of “customised solutions”, community involvement and perseverance.

Dharavi, which is located in India’s commercial capital Mumbai, is spread over an area of 2.5 square kilometres and has a population of 6,50,000. During the initial days, the slum saw a rapid transmission of the deadly virus.

The first COVID-19 patient in Dharavi was detected on April 1, nearly three weeks after Mumbai recorded its first positive case on March 11.

The Washington-based global lender, in its biennial Poverty and Shared Prosperity report, said that in the space of three months, by July 2020, reported cases in the area had been cut to 20 per cent of their peak in May. It appreciated the effective approach that tapped the skills and dedication of community members to stem the rapid spread of coronavirus in Dharavi.

It also praised how Mumbai civic body mobilised community members and staff from private medical clinics for a strategy based on mass screening for fever and oxygen levels. To help poor families during the lockdown, foundations, nongovernmental organisations and volunteers provided thousands of households with ration kits.

On Tuesday, a Mumbai civic body official said that the COVID-19 tally in Dharavi slum colony rose to 3,280 with the addition of 22 fresh cases.

Of the total 3,280 cases, 2,795 patients have been recovered from the infection, he said, adding that the slum now has 192 active patients.

In July, the World Health Organisation (WHO) also praised the efforts taken to contain the spread of the COVID-19 in Dharavi, underscoring the need for community engagement along with national unity and global solidarity to turn the pandemic around.

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“There will probably be a quick rebound as all the restriction measures linked to lockdowns are lifted, but a full recovery will take as much as five years,” Reinhart said in a remote intervention during a conference held in Madrid.

Reinhart said the pandemic-caused recession will last longer in some countries than in others and will exacerbate inequalities as the poorest will be harder hit by the crisis in rich countries and the poorest countries will be harder hit than richer countries.

She said global poverty rates will rise following the crisis for the first time in 20 years.

Earlier the head of the International Monetary Fund, Kristalina Georgieva said that the coronavirus pandemic will turn global economic growth “sharply negative” in 2020, triggering the worst fallout since the 1930s Great Depression.

She said the crisis would hit emerging markets and developing countries hardest of all, and those countries would then need hundreds of billions of dollars in foreign aid.

Georgieva said the pandemic was hitting both rich and poor countries, but many in Africa, Asia and Latin America were at higher risk because they had weaker health systems. They were also unable to implement social distancing in their densely populated cities and poverty-stricken slums.

She said investors had already removed some $100bn in capital from those economies, more than three times the outflow seen during the same period of the global financial crisis.

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Developing countries such as Venezuela are already in a state of stagnation due to lack of economic balancing. Venezuela’s economy has been hit hard by falling oil prices, which have forced the currency to depreciate. Venezuela has been going through a period of economic distress since 2016 due to high inflation and stagnant growth.

The potential for stagflation remains worldwide due to the impact that COVID-19 has had on the world economy. The situation in India is no different. The country’s Gross Domestic Production (GDP) is likely to move towards ‘negative growth’ in the current financial year. Various global agencies have predicted a recession of three to six per cent this year. In the 2020-21 fiscal, India will face a financial crisis, which IMF has projected at 4.5 per cent, Fitch at 5 per cent and Citigroup at 6 per cent.

Inflation is on the rise, along with a severe downturn in economic growth. Inflation has already reached 6 per cent. Inflation in June stood at 6.09 per cent. Normally, when economic growth slows down, inflation falls. This is because when growth stops, people spend less. At the same time, we are moving towards rising commodity prices despite declining consumption. This is due to the significant shortage of supply. Inflation in essential commodities, including food, has already been seen.

Supply was affected by low production due to COVID-19. The pandemic has adversely affected the global supply chain. Supply is also declining globally as the world moves towards a trade war with China, which was responsible for the global epidemic of COVID. Restrictions on the import of products from China due to the conflict on the Indian border have adversely affected the availability of cheaper products. Apart from import of products, India is dependent on China for most industries and production materials. Although some industries in India are trying to reduce their dependence on China in terms of production materials, it will take time to see the full effect. China has so far maintained its dominance in the global market by producing more than it needs and supplying cheaply. When China is banned for political and emotional reasons, we must pay the price.

When GDP falls by 6% and inflation rises by 6%, the gap between growth and inflation will be huge. People who are frustrated by the loss of jobs and the leakage of income caused by COVID-19 are also facing inflation. On the one hand, the income of the people is declining and on the other, the need to cut costs as much as possible due to inflation will have a major impact on the economy of our country based on consumption.

At such a juncture, the central government is increasing fuel prices exponentially, which is like pouring oil on fire. Rising fuel prices have led to a sharp rise in inflation. With the international price of crude oil is at $ 40 a barrel, the prices of petrol and diesel are ruling at the highest ever point. The price gap between diesel and petrol has narrowed sharply. The government is pursuing a policy of squeezing people through fuel taxes as other sources of revenue have depleted. The government would not have been able to exploit this product if it had included petrol and diesel in GST-exempt products. As fuel prices rise after the lockdown, the “contribution” from the government to the slowdown of the economy is complete. There does not appear to be any move on the part of the government to recover from the crisis. The warnings and advice of economists fall on the deaf ears of the government.

Another effect of stagflation is that actual savings rate is ‘negative’. SBI, currently the largest commercial bank in the country, offers a one-year fixed deposit rate of only 5.1 per cent. When this interest rate is slashed to 6.09 per cent inflation, the investor loses about one per cent. Investing is done to prevent the value of money from being eaten away by inflation. At the same time, when inflation reaches higher than interest rates, this purpose of investment is thwarted. One of the strange consequences of stagflation is that even when invested, the value of the money leaks out.

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