Archives: Publication

• We may have to take recourse to some extraordinary sources to finance the exceptional spending needed to revive growth
• Policymakers have to decide if they want higher growth along with other pain points or a little less growth but also less pain that would have to be borne later on

In my column last month in Mint (Triple Trouble: Coronavirus Hunger And The Economy 17April) I had said that India is grappling with three crises at the same time: a public health crisis caused by the covid-19 pandemic a humanitarian crisis unleashed by the sudden imposition of a nationwide lockdown that revealed little preparation but was more stringent than anywhere in the world and an economic crisis triggered by the shutting down of large segments of the economy.

So far India is clearly winning the public health battle. We have been lucky that the pandemic struck us late. We could learn from the experience of countries that were struck earlier. Strong early action has contained the pace at which the virus has spread giving us some time to ramp up a weak public healthcare system to cope with the pandemic. The number of daily deaths highly volatile and increasing by 18-20% per day in early April started coming down sharply about two weeks after the lockdown was imposed. That increase is now stable at around 5% per day. The ratio of deaths to recoveries is also coming down. The counterfactual of what might have happened in the absence of a strong early lockdown is frightening as we have seen in Italy Spain the US (especially New York) etc. However this battle is being won at a huge humanitarian and economic cost.

On the humanitarian front the picture remains grim. Secure in our affluent or middle-class homes it is difficult for us to imagine the plight of millions of daily wage workers. They have no jobs no income and no food and in the case of migrant workers they have had no means of getting home. What was needed urgently was a generous package of food and income support for whoever sought it and without complicated targeting. Following the ₹20 trillion package announced by Prime Minister Narendra Modi on 12 May finance minister Nirmala Sitharaman announced a component to provide free rations to migrant worker households even without cards and some additional support measures.

Still while government spokespersons wax eloquent on television about the wonderful arrangements in place to shelter and feed unemployed workers and to transport them home these images are juxtaposed against other images of endless lines of men women and even little children with no support whatsoever walking cycling or jostling into crowded trucks desperate to get to their homes hundreds of kilometres away. These surreal contrasts starkly highlight our insensitivity. They tell us that we in our world are quite out of touch with the ground reality of their world.

On the economic front however the outlook is more hopeful now following the PM’s announcement of a huge financial package though it may not be possible to fully implement in one year.

Simulations in the Quarterly Review Of The Economy of the National Council of Applied Economic Research to be launched at a webinar on 15 May indicate that in the absence of a macroeconomic stimulus gross domestic product (GDP) would fall by over 25% in the first quarter of 2020-21 and by about 13% during the whole year. The unemployment rate exceeded 27% at one point according to the Centre for Monitoring Indian Economy something that has never happened before.

An expenditure stimulus of around 5% of GDP over what was budgeted for 2020-21 which many including this columnist have been recommending would turn the recession around to a 3.6% growth. But that would come with double-digit inflation a large fiscal deficit and an unsustainable 3.6% current account deficit. A more modest expenditure stimulus of 3% of GDP would generate a lower but still positive growth of 1.2% but also lower inflation (8.9%) a smaller fiscal deficit (8.8%) and a lower current account deficit (3%). This is the preferred option.

 It turns out that after netting liquidity measures undertaken by the Reserve Bank of India (4% of GDP) the ₹20 trillion cumulative monetary-fiscal stimulus package announced on 12 May would amount to an additional expenditure stimulus of around ₹12 trillion or 6% of GDP including the additional borrowing of ₹5.9 trillion already announced. This is larger than the 5% of GDP stimulus with even larger fiscal and current account deficits and high inflation.

 Details of additional expenditure in the package are still being rolled out. But the harder question is how such a massive borrowing programme would be financed. With the additional borrowing the total borrowing programme of the government (Centre plus states) would amount to over ₹17 trillion. Sovereign lending of this scale is quite unprecedented for our financial system and cannot be managed through any single approach if at all. A combination of channels will be necessary.

 The government should first borrow from commercial banks. Since state governments face a higher cost the Centre could borrow on their behalf. In either case the existing Fiscal Responsibility and Budget Management Act would have to be suspended. However there are limits to this channel. Beyond a point it would push up yields and crowd out the private sector. Second the Reserve Bank’s ways and means advances should be re-purposed and further liberalized with a much larger ceiling and for a longer period (say one year) after which advances can be converted into long-dated securities. Next as the lender of last resort the central bank should directly monetize the residual part of the deficit through private placements as a one-time arrangement. Finally it would be prudent to spread this borrowing over two years 2020-21 and 2021-22 to restore macroeconomic stability.

 Sudipto Mundle is a Distinguished Fellow at the National Council of Applied Economic Research. These are the author’s personal views.

It’s less egalitarian than TV in delivering education. Net-based learning holds promise provided the digital ecosystem improves

The NCAER Skills Report 2018 discussed the immense potential of online learning albeit as complementary to more traditional methods. In the current situation online education is turning out to be a substitute to traditional modes. Is India ready for this switch in terms of its infrastructure and digital readiness of children?

Infrastructure readiness has to be assessed in terms of household assets ownership versus school facilities because of the lockdown that is characterised by social distancing. The National Statistical Organisation (NSO) 75th Round survey on ‘Social Consumption of Education in 2017-18’ had probed households’ ownership of computers and access to the internet.

The computer was a catch-all for devices like desktop laptop notebook netbook palmtop tablet (or similar hand-held devices). Specifically the smartphone was not included in this list. Further the survey probed if a household member of age five years and above had used internet to find evaluate and communicate information from any location during the last 30 days preceding the date of survey via any of the above-mentioned devices and smartphone etc.

The analysis only includes households which had students aged between 5-29 years and were currently enrolled and attending school. The survey showed that 8.3 per cent of households had computers and 21.6 per cent had internet facility. Further a larger share of households had access to internet facility versus ownership of computers. However there are large variations between rural and urban areas and intra-regional gaps as well. In urban areas 20 per cent of households had computers and 39.8 per cent had access to internet (see Table). The corresponding numbers in rural areas were 4 per cent and 15 per cent respectively. In the top two urban quintiles 68.3 per cent and 50 per cent of households had internet access respectively. This number was 18 per cent in the bottom-most urban quintile. Twenty-nine per cent of households had internet access in the top-most rural quintile and 5.7 per cent in the bottom-most quintile.

Digital skills

The Indian youth are also characterised by limited digital skills. Only 17.6 per cent of the youth could use a computer and 18.4 per cent could access internet. As per the NSO (2019) the ability to use of computer could include any of the following tasks — copying or moving a file or folder using copy and paste tools to duplicate or move information within a document sending e-mails with attached files (example document picture and video) using basic arithmetic formulae in a spreadsheet connecting and installing new devices (example modem camera printer) finding downloading installing and configuring software creating electronic presentations with presentation software (including text images sound video or charts) transferring files between a computer and other devices writing a computer program using a specialised programming language.

The ability to use internet meant that the household member was able to use internet browser for website navigation using e-mail and social networking applications etc. to find evaluate and communicate information. Therefore relatively speaking only the top most urban quintiles in India are the most ready for online education. State/UT education policy during the lockdown needs a more egalitarian means of delivering education. One alternative to online education is delivery of education via television.

The Delhi Government is ahead of the curve in thinking about it. The National Family Health Survey 2015-16 shows that 86 per cent of urban households and 51.5 per cent of rural households had colour television. In the short-run the television holds a much more viable equitable cost-efficient and scalable alternative than online education.

A caveat remains that is how will children be assessed on their understanding of these lessons? Help or parental guidance at home especially in bottom quintiles may also be limited. Private tuitions are also not currently available.

The current crisis has acted as a fillip to encourage digital education. However to achieve its potential in the medium run Indian schools need to be better equipped digitally which in turn needs to be measured appropriately by various statistical agencies. There is on-going research in NCAER to construct education satellite accounts for two States. These tools may be potentially used to analyse the contribution of digital education.

Students need to learn digital skills for its own sake and improving quality of education. The emphasis on online education has to be accompanied with changes in curriculum textbooks teacher training examination systems and pedagogy. Last but not the least quality of traditional education has to be improved too.

Bornali Bhandari is a Senior Fellow; Charu Jain an Associate Fellow; and Ajaya Sahu a Senior Research Analyst at the National Council of Applied Economic Research. Views are personal.

Survey asks what activities respondents would resume if lockdown gets lifted on May 4

The National Council of Applied Economic Research (NCAER) an economic policy research institute on Thursday launched the second round of Delhi National Capital Region Coronavirus Telephone Survey (DCVTS). The results of this second round will be released on May 2.

“The survey asks what activities respondents would resume if the lockdown were to be lifted on May 4 and whether households have received relief from the government including cash and rations” said the release.

The goal of second round of DCVTS is to track changes in the attitudes of respondents as the pandemic has progressed and as households deal with the economic domestic and logistical challenges posed by the extended lockdown.

Round one of the DCVTS was carried out during April 3-6. The DCVTS-1 interviewed a sample of around 1750 adults to measure how aware Delhi NCR residents are about the Covid-19 and its impact on households.

The results of DCVTS- 1 that were released on April 12 showed that people in NCR were highly aware of the danger of the virus and its modes of transmission and were mostly trying to practise social distancing while coping with the challenges imposed by the lockdown particularly income losses and supply shortages.

This rapid telephone survey being carried out by NCAER’s National Data Innovation Centre covers a representative random household sample covering both rural and urban parts of the Delhi NCR spread across Delhi Haryana Rajasthan and Uttar Pradesh.

When asked about how many people they had come in contact with outside the house over the preceding 24 hours over 50 per cent responded that they had not come in contact with anyone.

With the nation in the midst of an extended lockdown to prevent the spread of COVID-19 the question of what to do next looms large. We are operating in a brave new world where modern governance has met an old-fashioned enemy. The Spanish flu epidemic of 1918 is believed to have killed more than 15 million Indians and COVID-19 is seen to be almost as virulent. At the same time there are more weapons in our arsenal to deal with this enemy today than a century ago.

Worldwide social distancing is seen as a way to reduce the spread of the disease until health systems are able to cope with it and a vaccine is developed. The challenge we face is between public health needs and the requirement to keep the wheels of the economy rolling. How has the lockdown affected the society? Should we continue it for a few more weeks? While there is no crystal ball to predict the future a recently completed Delhi National Capital Region Coronavirus Telephone Survey (DCVTS) by the National Council of Applied Economic Research (NCAER) offers interesting insights into the present. The NCAER National Data Innovation Centre has carried out the Delhi Metropolitan Area Study (DMAS) since February 2019. It has surveyed over 5000 urban and rural households in Delhi as well as in the surrounding districts of Uttar Pradesh Haryana and Rajasthan via in-person interviews. Between April 3 and April 6 2020 about 1750 households from this larger study were surveyed in a telephone interview about their understanding of symptoms and transmission of the novel coronavirus as well as their experience of the lockdown.

The results are fascinating. The massive communications effort undertaken by the government ensured that every single person interviewed had heard of coronavirus and 95 per cent believed it to be very dangerous. When asked to identify symptoms of the infection they could easily distinguish between coronavirus as a respiratory disease as opposed to a gastrointestinal disease. The next stage of communications messaging however will need to focus on helping people identify when to seek help. Only about 45 per cent of the respondents noted breathing difficulties as a key symptom and only 36 per cent correctly named all three — fever cough and breathing difficulties — as major symptoms. Past rounds of DMAS have found that 11 per cent of individuals suffered from cold and flu like symptoms. If all of them try to get coronavirus tests this will pose an overwhelming challenge for the health system. Thus educating respondents about key symptoms and identifying conditions under which treatment must be sought will be a necessary part of future communications strategy.

Respondents reported that the lockdown resulted in substantial reduction in income in the preceding two weeks. About 55 per cent respondents said that their incomes had reduced “very much” while 30 per cent said it had reduced “somewhat”. Most of the income drop occurred in households that drew income from casual labour or petty business. Regular salaried workers were somewhat isolated as were farmers. Among households where the primary source of income was casual labour 75 per cent suffered large income loss compared to 47 per cent for regular salaried workers. The drop in income affected households in the bottom 20 per cent of the wealth distribution more than those in the top 20 per cent — 62 per cent in the bottom quintile reported a large decline in income compared to 42 per cent at the top. This lends strength to the urgency for ensuring income support to households below the poverty line.

When asked about the supply of essential goods such as food cooking fuel and medicines 29 per cent respondents reported shortages in accessing one of the above items. Disaggregated data shows that 21 per cent respondents mentioned experiencing shortage of vegetables and fruits (25 per cent in rural areas and 15 per cent in urban areas) followed by grains and cereals (14 per cent) medicine (9 per cent) cooking fuel (8 per cent) and milk (6 per cent). This suggests that supply chains need to be strengthened and efficient distribution possibly via PDS shops will have to be ensured.

Social distancing one of the primary weapons in our arsenal is understood by most households and people are making an effort to follow it. About 85 per cent of the respondents noted some form of social distancing as a way of preventing infection. When asked about how many people they had come in contact with outside the house over the preceding 24 hours over 50 per cent responded that they had not come in contact with anyone. Most of the others noted only one or two contacts outside the house. However a minority of individuals had a large number of contacts. Many were in occupations like shopkeeping that did not allow them to distance themselves. We will need to develop strategies such as use of masks that allows these individuals to continue to offer essential services while reducing spread of the disease.

In spite of the difficulties noted above the support for the lockdown remains high. When asked “in order to limit the spread of the coronavirus if the lockdown phase is extended for another two weeks after April 14 would you support that or oppose that?” 63 per cent strongly supported it 24 per cent supported it 4 per cent opposed it while 9 per cent were either neutral or responded that it depends on the situation. This willingness to continue the lockdown is striking considering the fact that while most respondents understood the danger posed by the virus few saw it as being personally threatening. When asked about the chance that they themselves or their family members may contract the disease 65 per cent reported no chance while another 22 per cent reported low chance of getting infected with the virus. These results suggest that there is tolerance for the lockdown at least among the individuals who responded to DCVTS in the Delhi NCR region. However we will need to focus on maintaining transportation arteries and ensure that both production and distribution of critical items including food grains continues as smoothly as possible.

An emergency like the threat of coronavirus brings out the best and the worst of ourselves. It has brought forth a civic response unlike any we have seen in the past outside of war times. Regardless of their personal situation individuals stand ready to fight the virus. In spite of some missteps it has also brought out the strength of the Indian bureaucracy in identifying the challenge and in mobilising strategies like social distancing before the virus had a chance to spread to rural India. At the same time it has also amplified preexisting vulnerabilities where some segments of the society face greater challenges due to loss in incomes or are at a higher risk due to preexisting conditions such as diabetes or heart condition. The coronavirus threat also highlights the vulnerability of the Indian health system forcing us to make difficult choices in who to test whom to treat and when to treat as we try to deal with shortages in testing supplies and treatment facilities.

Sonalde Desai is Director and Santanu Pramanik Deputy Director at NCAER National Data Innovation Centre. Views are personal.

Gender-based consequences of Coronavirus make it imperative for both the administration and social networks to ensure that the pandemic does not negate the gains of gender equality

Even after the conclusion of the first phase of the three-week nationwide lockdown imposed by the Government and its further extension up to May 3 to curb the spread of Coronavirus signs are emerging that the virus is not going away anytime soon. This is grim news for the country from both the health and economic perspective especially for the female population which is likely to suffer on multiple fronts due to the spread of the virus and the resultant need for the people to stay indoors.

The first category of affected women are healthcare staff including nurses Accredited Social Health Activists (ASHAs) and anganwadi workers who have been holding the fort against the disease all across the country. A Government of India report of 2015 revealed that 88.9 per cent of the support and ancillary staff among health workers primarily nurses midwives and ASHAs are female. This is corroborated by earlier data from the 68th round of the National Sample Survey on the “Employment and Unemployment Situation in India” (July 2011 to June 2012). With hospitals facing an influx of Coronavirus patients and given the need for active contact tracing of positive cases these workers have become frontline warriors in times of crisis.The World Health Organisation (WHO) reported that globally too women comprise a majority of the healthcare staff accounting for 70 per cent of the total in 107 countries including India. The COVID-19 outbreak is a physical and emotional nightmare for many healthcare workers. Eleanor Holroyd currently Professor at New Zealand’s Auckland University of Technology recounts her interactions with student nurses when she was professor of nursing at the Chinese University of Hong Kong during the SARS epidemic in 2003. A large section of these nurses experienced confusion anxiety and stress from the long days of caring for patients and seeing many of their colleagues too contracting the disease in the process. “There’s the idea that if there’s a gap in the health system the nurses will fill it. Their duty is to be ever-present and visible offering empathy and care… Add that to a sick child or husband or parent and the very uncertain nature of an epidemic it can be hard [for the nurse] to hold on” says Holroyd.

The crisis is also likely to affect women disproportionately because of the already declining female labour force participation (FLFP) rate in India which according to the Economic Survey of India of 2017-18 fell from 36 per cent in 2005-06 to 24 per cent in 2015-16. The India Human Development Survey (IHDS) conducted in two waves in 2004-05 and 2011-12 too reported a fall in the FLFP from 31.12 per cent in 2005 to 24.77 per cent in 2012. The IHDS is a multi-topic survey jointly conducted by the National Council of Applied Economic Research (NCAER) and the University of Maryland covering 41554 households in 1503 villages and 971 urban neighbourhoods across India. This survey also suggests that the decline in FLFP could be due to the lack of demand for female labour rather than that of labour supply. The paucity of demand for women workers could be reinforced in the coming months after the real impact of the Coronavirus becomes apparent in various sectors of the Indian economy.

Another category of women likely to be impacted by the pandemic are salaried workers many of whom are currently working-from-home but could eventually face the prospect of lay-offs and pay cuts once their employers return to the normal work routine in a recessionary economy. The temporary or permanent closure of many businesses is likely to have a severe adverse impact on a range of professions dominated by women such as flight attendants tour operators sales assistants and frontline hotel staff and cleaners.

Academics who have studied past pandemics including Ebola Zika SARS swine flu and bird flu report their deep and persistent effects on gender equality. According to Julia Smith a health policy researcher at the Simon Fraser University Vancouver Canada these outbreaks affected everyone’s incomes but “men’s income returned to what they had made pre-outbreak faster than women’s income.” This outcome is compounded by the already-existing wage discrimination in many sectors. For example in the healthcare sector overall women reportedly earn 11 per cent less than their male counterparts. Anganwadi and ASHA workers receive salaries in the range of merely Rs 3000-4500 per month which is even below the minimum wage without any additional benefits like pension and maternity leave. These women may not lose their jobs but any decline in their family incomes due to the pandemic will make them an equal part of the economic crisis looming ahead.

Even women who are out of the workforce and traditionally stay at home are facing a huge challenge emanating from the lockdown with their already extensive care-giving duties multiplying even further due to the reverse migration of household service providers like maids cooks and nannies to their native villages. A 2015 survey by the Organisation for Economic Cooperation and Development found that an Indian woman does far more “unpaid work” almost six hours per day on an average than her peers in most other countries. The corresponding figure for men is just 52 minutes per day.

In fact as per an Oxfam report titled “Mind the Gap” released in March 2019 Indian women do the most unpaid care and domestic work in any country barring Kazakhstan largely because patriarchal norms which dictate tasks such as cooking cleaning looking after children and the elderly and fetching water and firewood have to be performed by women alone.

Data for the first wave of IHDS also highlights the domestic drudgery for women especially in rural areas. The survey found that women in India’s villages were spending an average of 240 minutes per week collecting firewood and 66 minutes per day fetching water as compared to much lower corresponding figures of 136 minutes per week and 29 minutes per day respectively spent by men in the household.

Last but not the least is the issue of domestic abuse the incidence of which is believed to go up exponentially in any kind of crisis especially the current one that mandates people to practise social isolation and stay at home for sustained periods. What is worse in a lockdown situation women in violent relationships are unable to seek help as the perpetrators of the violence are always around whereas those who can help the victims are inaccessible.

The US the UK and China have witnessed a significant rise in domestic violence since the advent of the Coronavirus. In India the National Commission for Women (NCW) reported double the usual number of domestic abuse cases since the imposition of the lockdown. According to the NCW Chairperson Rekha Sharma a total of 257 complaints related to various offences against women were received during the period March 24 to April 1 out of which 69 complaints were related to domestic violence. The UN Secretary General Antonio Guterres has in fact urged Governments “to make the prevention and redress of the horrifying [domestic] violence against women a key part of their national response plans for COVID-19.”

These gender-based consequences of Coronavirus make it imperative for both the administration and social networks to ensure that the pandemic does not negate the gains of gender equality achieved over the past few decades. Diah Saminarsih Senior Adviser on Gender and Youth to the WHO Director-General avers that tackling this issue will be top priority in the WHO’s forthcoming study on the connections between gender and COVID-19. It remains to be seen how well women will be able to ride out the Corona storm.

The writer Anupma Mehta is Consultant Editor at the National Council of Applied Economic Research. Views expressed in this article are personal.