Social, Economic and Legal Impact of CoVID-19

Introduction:

We are in the middle of a global pandemic which is inflicting various kinds of shocks on the countries worldwide; and also imposing wrenching trade-offs, ranging from economic to health to social. The world is in overwhelm because of grossly inadequate resources to tackle the COVID-19 outbreak.

The outbreak sways all the segments of the population, particularly, the elderly, people with disabilities, and the indigenous ones. The people without shelter or access to essential needs are disproportionately affected due to limited movement. The pandemic has also led to an exacerbation of the negative stereotypes about the elderly. The view is that the disease is much more prevalent in old-age people. Social distancing is the best cure for this disease; but if not rightly implemented, such isolation has far more detrimental effects on the health of older people than expected. Billions of youth are suffering from a social crisis. Because of the closing of educational institutions, trouble in the learning processes and an inordinate rate of unemployment.

As the menace of the pandemic rages on, the number of domestic violence cases are increasing around the globe. The problem has arisen alarmingly and steeped across mostly all jurisdictions; which includes countries like China, United States, Brazil, Tunisia, United Kingdom, Russia, France, etc. As per the report of WHO, one out of every three women is a subject of domestic violence.

The reason for this increase is the hardship and anxiety the mandatory stay-at-home rules, physical distancing norms, and economic uncertainties cause. The contributory factor is the loss of employment, work from home, shared household, child care responsibilities, and no liquor. At the same time, the pandemic has resulted in a fall of cases of organized criminal activities. An increase in the movement restrictions across the nations decreases the number of street crimes, thefts, and burglaries. However, with people staying at homes and working online, an increase in the cyber–crimes and hate crimes is possible.

Economic Impact

The economic disruptions caused are at an unprecedented scale. Most of the major economies of the world (including the USA, France, and Germany) are preparing for a negative growth rate in the FY21. Unemployment took a tough toll on all the economies; and it is difficult to gauge the net impact of inflation at present. For, this impact depends on the intensity and duration of the pandemic. According to the World Economic Forum, the first quarter of the FY20 saw the most brutal global equity collapse since the Great Depression; exacerbated by a 60% oil price slump. Due to a hard fall in stock prices and real estate values various industries face the imapct.

There is a devastation of economies and their financial resources because of the pandemic; and the consequent lock-down in the country. For instance, the Indian economy shutdown coincided with the country’s peak farm season, in which Rabi crops harvest and sell. Inter-linkages of agriculture with other sectors of the economy have well-disrupted the crop value chain operations- procurement, logistics, transport services, processing, export shipment etc. Big retailers, restaurants, and hotels are all closed down and household demand has plummeted drastically.

As the farmers face difficulties in harvesting and marketing of produce, so do the Agri-based industries. They depend on agricultural produce for raw materials or involved in processing it.⁸ Lock-down restrictions categorize agriculture as an essential, allowing certain services to work from home. But it is anticipated that manufacturing is the worst-hit sector. There is also a disruption of many service sectors like banking, trade, transport, electricity and mining. This adversely affected investment, employment, income, and consumption, pulling down the aggregate growth rate of the economy.

Legal Impact

Because of the severe effect on the global businesses , certain legal implications of the outbreak also came to the surface. The World Health Organization has declared the COVID-19 outbreak as a global pandemic. As a result, it likely qualifies as a force-majeure event. That is, an “event or effect that can neither be anticipated nor controlled”. This signifies that any delay or non- performance of any obligation by any party under a contract due to COVID-19 is justifiable without constituting a breach of contract. In India, COVID-19 is already a force majeure for real estate projects. However, in order to invoke this clause, there must be a connection between the pandemic and the affected party’s failure to perform.

This has brought about a storm in the world of commercial contracts as the businesses across various sectors are either defaulting on contractual obligations or renegotiating them. As per the latest press release by the World Trade Organization, world trade is expected to fall by between 13% and 32% in 2020 because of high disruptions in the economic activities. The most affected area of the outbreak is the labor welfare and in order to curb the menace, the governments across the globe are taking the initiative to provide relaxations in the respective labor laws. For instance, the Canadian government will contribute towards employers’ wage bills to reduce layoffs and pay cuts; in the UK, firms can claim the sick pay for coronavirus patients under the Coronavirus Statutory Sick Pay Rebate scheme.

As an important organ of all the jurisdictions, the judiciary is also gearing up to combat the challenges posed to it by the COVID- 19 pandemic by allowing the use of video-conferencing equipment for hearing of urgent matters¹³. Though some relief has been provided as a result of this solution but it has not proved to be effective in all the matters. Indian judiciary was already suffering from a rampant number of backlog cases and now the number is on a high-rise, as consideration is being given only to the urgent bail matters and petitions concerning rents and fundamental rights of the citizens amid lockdown.

Conclusion

On the economic plane, the recessionseems to be inevitable and demand to decline in a precipitous way. This will inevitably lead to a vicious downward cycle and a sharp fall in the GDP of all the affected nations. To enable economic recovery in the future, many economists suggest that the governments, for the time being, may temporarily increase the budget deficit, leaving behind its FRBM limits.

Nevertheless, the magnitude of the migrant distress should open the eyes of all to the grim situation of the economies. COVID-19 presents an opportunity to the governments worldwide for initiating meaningful health reforms, investment in human resources, and creation of buffer stock and realignment of budgetary priorities.