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  • COVID-19 Challenges for India: Tackling MSME Sector and Unemployment

    COVID-19 Challenges for India: Tackling MSME Sector and Unemployment

    The COVID-19 pandemic has shaken global markets as countries struggle to battle national and global health crisis. Indian government has announced an economic stimulus of  Rupees 20 lakh crore (Rs 20 trillion corresponding to $ 267 billion), roughly 10% of GDP for FY 21, in which six measures were framed for the Micro Small Medium Scale Enterprises (MSME). Government has allocated 3 lakh crore for collateral-free loans, additional debt and equity infusion with slew of other measures to protect the bruised MSME sector. The rise in the number of casualties and infected cases  all over the world present a grim picture. This is expected to result in a global recession that could lead to a loss of over $ 3 trillion to the global GDP. India, in an effort to contain the spread, has extended the lockdown at the cost of freezing almost 60 percent of its economy. Third extension of lockdown on May 3rd in order to flatten the curve will further contract the demand for next few quarters. IMF has revised India’s growth downwards to 1.9 percent for the year 2020 and 7.4 percent for the year 2021. Although the growth projection is not negative as in the cases of Eurozone and the US, India will need to overcome significant structural challenges to bring the economy back into a high growth trajectory. The cost of battling COVID-19 is not limited to the dip in growth but also includes the bleak prospects of a sizable percentage of the population being pushed below the poverty line.

    Apart from the virus, India faces two key challenges. Firstly, almost 80 percent of its labour force is part of the informal sector, which is expected to take major hit as a result of  the lock-down. Secondly, as India’s working age population will continue to expand  till 2055─ the cost of missing this demographic dividend will directly impact the future growth trajectory. Japan, China, South Korea and Singapore have capitalized on their demographic dividends and experienced double digit growths. The current disruption in the global economy will have a significant impact on India’s growth for the next few years. Therefore, diagnosing the systemic problems in the economy is crucial to developing a viable strategic economic policy. The Periodic Labour Force Survey (PLFS) notes that only nine percent of Indian workers are employed with organizations having more than 20 workers. Rest of the labour force are employed with small enterprises which have been forced to lay-off most of their employees due to the extended lockdown.

     Business Supply versus People Demand

    Contributing 30-35 percent of the GDP— Micro, Medium and Small scale industries face a higher risk of shutting down their production due to cash flow constraints. All India Manufacturers association reported that 43 percent of the MSMES will cease to operate with the lockdown extension. Around 99 percent of the MSMEs are dominated by Micro enterprises in which labour intensive production units are already under stress with restricted labour movements. Finance minister’s attempt at redefining MSME by including businesses with higher investment and turnover does not address the main problem of majority of unregistered micro enterprises shutting down due to less or nil operating capital.

    A total of 114 million people are employed in MSMEs and the shortage in working capital as a consequence of the lockdown would drive most businesses out of the market. Furthermore, an extended demand shock would curb the production and supply, as a result of which small industries with limited capital will most likely shut down. Additionally, 86 percent of the enterprises are unregistered and 71 percent of labourers have no written job contracts. Since most of the enterprises function in highly unorganised sectors, they would have been forced to lay off employees.  Thus relevant policies will need to be recalibrated in order to address the problem of unemployment– currently estimated to be 27.11 percent. The share of MSME exports is valued at $147.7 billion– showing an impressive jump from the previous value at $75 billion. The small number of exporting businesseswill be clamped down due to insufficient liquidity especially with weak global demand.  Hence, the policy must focus on balancing to keep the interest rates low in the long run and enhance discretionary spending to boost investors’ confidence. One of the six measures announced by the government is to protect the local MSMEs from unfair foreign competition. Pursuing a protectionist policy in the business sector before the recovery of domestic demand would imply higher risk of the economy being caught in a low demand cycle. Additionally, the recent exemption of labour laws threatens the workers’ income─ reducing the revival rate of consumer demand. According to a latest reading of the consumer demand risk map, casual labourers in both rural and urban areas are at highest risk of salvaging potential expenditure.

    Need to Reorganize MSME and Boost Employment

    Although strong relief packages are demanded, India has limited fiscal space. The slew of measures announced by the central bank to ease the liquidity will cushion the MSME sector during the lockdown period. However, incentivizing small scale businesses to operate amidst weak demand would need recapitalizing finance based on the firm’s productivity. A structural makeover of the business sector will call for measures beyond just monetary policy. While current economic stimulus aims at protecting the business sector, challenges remain in adopting a medium term policy given the unorganized structure. The OECD countries have broadly undertaken measures to reduce the impact on their Small and Medium Enterprises (SMEs) by providing wage subsidies, loan guarantees, direct lending and modified structural policies. The Reserve Bank of India (RBI) has similarly offered a much-needed loan moratorium, cuts in the Cash Reserve Ratio (banks minimum reserve requirement to be held with RBI) and working capital financing. Although the second round of relief package has focused on small industries, the expectation of a burgeoning fiscal deficit to 5.07 percent from revised estimate of 3.8 percent means that financial  stimulus is somewhat of a double edged sword.

    Even prior to the pandemic, unemployment was at a 45 year’s high at 8.5 percent and consumption was on downtrend. The economic response for India must factor in the welfare loss while assessing the economic consequence. In five out of the first ten years of entering its demographic dividend phase, Japan was experiencing double digit growth.  If India is not to lose out on growth momentum during the current stage of its youth bulge, it would require effective and radical policy measures to counter the problem. Economic relief packages during the crisis must be followed with strategies to provide economic security to the working age population across the country.

    To keep up with the growth of the working age population, estimates suggest that India must create 10 million jobs annually. Ease of doing business becomes a crucial factor in creating employment opportunities. Indian policymakers are tasked to identify the methods to sustain the operations of MSME sector post lockdown. The large workforce resulting from India’s youth bulge cannot be undermined by this crisis. Policy prescription to create rapid employment and facilitate business operations is the priority. For India, it is important to endeavour to balance the immediate financial response with continuous public and human capital investment. Biting the fiscal bullet is inevitable in a crisis situation but assessing the cost of growth foregone is crucial to strategize policies for future. The real challenge lies in the transition of role from being protective to promotional through structural operations by factoring in the consumption demand. Temporary infusion of money in businesses and renovation of MSME sector is much needed to realize the ‘Make in India’ dream.

    Image Credit: Adobe Stock

  • Responding to COVID-19: A Framework for Analysis

    Responding to COVID-19: A Framework for Analysis

    Beginning December 2019 in Wuhan in China’s Hubei province, Coronavirus (Covid -19) has overwhelmed the healthcare systems and affecting education, travels, events and the economies worldwide. Governments all over have taken or bracing themselves to take extraordinary measures to contain the threat. In some countries, the measures taken to contain the epidemic appear as putting the nation under a state of siege. Some governments are adapting rather extreme measures – complete lock-down of the cities, the provinces and even the country itself, school closures, travel ban, cancellation of flights. Questions are being asked about how much freedom we are prepared to give up, for how long and onto whose hands?

    The paper argues that with threats and vulnerabilities transcending national boundaries and challenging most advanced knowledge and information systems in this era of intense globalization, the need for harsh and often draconian measures can hardly be over emphasized. At the same time there could be problems and unwelcome consequences in putting too much power in the hands of the governments dealing with the threat for an indefinite period of time. In view of this, the securitization framework as put forth by the Copenhagen School could be a better tool to deal with situations of unexpected crises such as what SARS epidemic proved it to be or what Covid-19 would inevitably entail.

    This paper is originally published in Vol 7 No 5 (2020): Advances in Social Sciences Research Journal and is republished by TPF under the Creative Commons Attribution 4.0 International Licence.

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  • Multilateralism in the Indian Ocean Region

    Multilateralism in the Indian Ocean Region

    A number of multilateral initiatives have emerged in the last two decades in the Indian Ocean Region. The composition has been varied, comprising of inside powers, some comprise of a combination of inside and outside powers, given the geographical construct of the region. Their efficiency has been varied. As such, trends indicate that the older, post-world war II multilateral institutions are gradually losing relevance. Newer coalitions appear to hold promise, some to deal with the foregoing challenges and other to facilitate economic aspirations. Dr Sunod Jacob makes an assessment of multilateralism contributing to an inclusive rule based order in the IOR.

    This article is being published as a chapter in the book titled – “Foreign Policy Perspectives for Sri Lanka 2021”.
    Image Credit: Photo by Kyle Glenn on Unsplash.

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    The Law of Armed Conflict and its continuing relevance to the South Asian Region

  • The Law of Armed Conflict and its continuing relevance to the South Asian Region

    The Law of Armed Conflict and its continuing relevance to the South Asian Region

    The South Asian region has had its share of recent historical experiences with large scale violations as well as allegations of large scale violations of international humanitarian law (IHL).2 This applies as much to instances of international and non-international armed conflict as it does to the situations created by new threats to peace and security such as terrorism. Memories of some of these unfortunate events have not faded over the years. For the sake of convenience, the paper is divided into two parts. The first part elaborates specific examples of IHL related issues in South Asia and also deals with some of the major thematic issues in the context of the region. The second part highlights the challenges to IHL application and implementation in this region. The conclusion summarizes the main strands in IHL’s relevance to the South Asian context. The most interesting aspect of our enquiry that stares us in the face is the fact that IHL related issues apply to almost all South Asian countries. The degree of intensity may differ but the fact remains that acts that attract universally applicable IHL provisions are found aplenty in the region.

    Image Credit: New York Times

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    The Law of Armed Conflict and its continuing relevance to the South Asian Region

  • Some Crucial Lessons as we Prepare for ‘Lock Down 3.0’

    Some Crucial Lessons as we Prepare for ‘Lock Down 3.0’

    Category : Democracy & Governance/Public Health
    Title : Some Crucial Lessons as we Prepare for ‘Lockdown 3.0’
    Author : M A Kalam  02-05-2020Covid-19 is a jolt to the way we work and live. India has been under, what IMF has called, “The Great lockdown”. As India moves into ‘Lockdown 3.0’, M A Kalam explores, in his opinion piece, the challenges faced by different segments of the Indian population. The economic impact is seen to be huge, and as we return to work and business gradually, we will witness huge behavioural changes that will necessitate how we address the new economic challenges.

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  • Artificial Intelligence in the Battle against Coronavirus (COVID-19): A Survey and Future Research Directions

    Artificial Intelligence in the Battle against Coronavirus (COVID-19): A Survey and Future Research Directions

    Artificial intelligence (AI) has been applied widely in our daily lives in a variety of ways with numerous success stories. AI has also contributed to dealing with the coronavirus disease (COVID-19) pandemic, which is currently happening around the globe. This paper presents a survey of AI methods being used in various applications in the fight against the deadly COVID-19 outbreak and outlines the crucial roles of AI research in this unprecedented battle. We touch on a number of areas where AI plays as an essential component, from medical image processing, data analytics, text mining and natural language processing, the Internet of Things, to computational biology and medicine. A summary of COVID-19 related data sources that are available for research purposes is also presented. Research directions on exploring the potentials of AI and enhancing its capabilities and power in the battle are thoroughly discussed. It is envisaged that this study will provide AI researchers and the wider community an overview of the current status of AI applications and motivate researchers in harnessing AI potentials in the fight against COVID-19.

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  • POST COVID 19: RE-IMAGINING THE NEW WORLD ORDER

    POST COVID 19: RE-IMAGINING THE NEW WORLD ORDER

    As the world grapples, rather unsuccessfully so far, with its worst pandemic in a century, COVID 19, it would be an understatement that the world, as mankind has known for decades, will ever be the same again! The Coronavirus is not just a medical emergency which has afflicted the entire world, already caused over 125,000  fatalities and  with its rampage  continuing alarmingly,   the socio-economic-political consequences for the world, in the near future, are likely to be as horrendous as the employment of a weapon of mass destruction(WMD).

    Post COVID 19, whenever that period dawns, what the new world order or disorder would be is agitating the minds of governments and analysts the world over. Though it is rather premature today to crystal-gaze as to when the world can rejoice that COVID 19 is now part of history, it is equally imperative for governments and global institutions, the world over, to frankly analyse the ramifications of  the aftermath of such an apocalyptic event. It will be better to be prepared for the after-results now than be found ill-prepared as the world was when this pandemic struck in full surprise and ferocity.

    The onslaught of this coronavirus was indeed a Black Swan event and hence it found the world, including the most powerful nation on the earth, US and most of the technologically advanced nations, like in Europe, grossly under-prepared – a fact that will puzzle future historians. For the uninitiated, a Black Swan event is a metaphor for an unpredictable event that is beyond what is normally expected of a grave situation and is characterized by both extreme rarity and equally severity in occurrence. Events like the Black Death plague which had engulfed the world 600 years back and took a toll of 25 million lives, the Spanish Flu a hundred years back which took millions of lives, the atom bomb attacks on Hiroshima and Nagasaki in Japan by the US Air Force at the near- end of World War II  or the 9/11 terrorist attack on the Twin Towers in the US could be categorized  as Black Swan events.

    Prior to ascertaining through the prism of uncertainty the contours of the “new normal” or the “next normal”, it will be in order to study what all went grievously wrong in the globe’s response to the pandemic. Firstly and, unquestionably, was the emerging superpower China’s total disdain for the fallout of the coronavirus. Reliable reports in the western media point out that as early as 17 Nov 2019, the virus was detected in the Wuhan laboratory in China’s Hubei province. It was attributed to the major animal market of Wuhan which sells dead bats, dogs, cats, fish, seafoods and many other forms of animal produce for the Chinese palate. Once the virus started spreading uncontrollably, it was only on 31 Dec 2019 that China cared to inform the WHO regards the spread of an “abnormal pneumonia”.

    From the beginning of Jan 2020, the pandemic rapidly spread its tentacles to the US and most nations of Europe with devastating effect. Amazingly and regrettably, the US and most nations were rather sluggish in their response mechanisms to combat this dreadful virus. No stringent lockdowns or social/physical distancing or curbs on travel or congregations was enforced—- the tragic results were for all to see with medical systems collapsing and no drugs/vaccines available, no hospital beds or ambulances, as  required, available. It was only that by end Feb/ mid-March some emergency measures were enforced—much too late though. The world expects all fellow nations to share critical information with each other in the event of such emergencies as such viruses do not recognize any international borders.

    In India too, there is a view that we may have been a bit late in enforcing lockdowns and other stringent measures. Nevertheless, PM Narendra Modi’s much awaited 21 days lockdown announced on 24 March (and its subsequent extension till 03 May 2020), though necessary, could have been better implemented with some advance planning. Though the centre and state bureaucracy did step up subsequently to resolve the teething problems, especially of migrant labour, many helpful interventions from well-meaning NGOs, gurdwaras, temples, the public and others, the humanitarian problems have been overcome to a large extent. Overall, the nation’s response, cutting across religious lines, to this medical emergency has been encouraging and embellished with humanitarianism.

    The other major fall-out of the COVID 19 pandemic will, in all certainty, be the catastrophic economic costs the world will have to bear. The IMF has stated that the current crisis is the most horrible in a century and will be likely worse than the “Great Depression” (1929-1939). It visualizes the global GDP to shrink by a whopping 3 percent though it forecasts that next year could witness an improvement. As observed all over the world, stock markets have tumbled to abysmally low levels, production facilities come to virtual shutdowns, staff laid off, air and rail travel shut, supply chains both international and intra-nation disrupted etc. In addition, oil prices have had a dangerously steep decline throwing the world trade and economy out of gear. The US with its financial muscle ultimately, despite being financially badly mauled, is expected to slowly bounce back. President Donald Trump, now in his crucial re-election year, may take some out-of-the box fiscal initiatives to bring the US economy back on track. The ongoing trade war between China and the US may witness contours of a rivalry not witnessed so far. Anyway, China needs to be globally chastised for its unethical practices.

    It will be a natural fall-out for most nations now to take a fresh look at their trade relations with China. Japan has already announced a US $ 2.2 billion package for their industrialists to pull out of China. Others like Taiwan may do so too. Some of the industries moving out of China may prefer to re-locate to India and here is a good chance for India to welcome them here and give a fillip to India’s currently near-stagnant “Make in India” programmes. However, the Indian establishment will have to shed its hollow big talk, traditional lethargic attitudes and genuinely encourage foreign investments into India. India’s private industry is modern, robust, and skilful enough to work together with foreign collaborators.

    The world now must rise and strengthen global institutions like the UN and its various agencies to combat global challenges. No country, however powerful, can exist as an island as witnessed now. Nations like China, notwithstanding its deep pockets, must be cautioned not to disturb the economic equilibrium of the world, most of which is reeking with poverty and under-development. China’s intransigent attitude not even allowing a discussion on the pandemic at the United Nations Security Council last fortnight is unacceptable to the world.

    In the coming years, it is certain that owing to the gruesome after-effects of COVID 19, nations, both the powerful and the poor, are going to take far more seriously their public health preparedness and emergency standard operating procedures. Medical infrastructures, rightly so, demand far greater thought, planning and investments than hithertofore.

    It is well on the cards that even the militarily powerful nations will look into the various nuances of biological warfare. It is now clear to the entire world that a virus can prove to be far more lethal than many megatons of explosives and modern weaponry. According to many western journalists, China may deny its botched-up bio warfare experiment, but it is a matter of time when the bitter truth will unravel. India as a signatory of the Geneva Convention of 1972 (effective since mid-1975) to eschew production and experimentation of  WMDs including bio weapons should not only  use its moral authority to make nations be sincere adherents of existing UN protocols  but, importantly, for its own safety put into place  adequate defensive mechanisms to thwart such challenges. The lessons to be drawn from COVID 19 must be taken seriously. In addition, the UN must draw up contingency plans to prevent, contain and manage and ultimately defeat such likely challenges in the future. It will have to be a synthesis of health, economic, political, and even military measures.

    The new world order, in all likelihood, will be drastically differing, more sobering, additionally fiscally prudent, and conservative and with nations becoming isolationist and inward looking. China’s image and its economy will certainly take a sound beating. Though the pandemic is world-wide and global problems, unquestionably, require global solutions, yet in the coming years we may witness the rise of hyper-nationalism and authoritarianism in most nations including democracies. Nevertheless, as India strives to do its bit to get its economy back on track and takes various prophylactic measures for the future, it must do its bit to strengthen global institutions.

    This article was published earlier in ‘USI – Strategic Perspectives‘. Views expressed are the author’s own.

    Image credit: Tehran Times

     

  • Need to Redefine MGNREGS: Response for a  post pandemic Economy

    Need to Redefine MGNREGS: Response for a post pandemic Economy

    The Union budget 2020 was heavily criticized for allocating only INR 60,000 crore on the UPA flagship program, Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGA). Discontent continues even after the relief package mentioned INR 200 per person will be paid for the next three months. With 7.6 crore workers registered under MGNREGA program around one trillion (INR) would be required to fulfill the promise. The pandemic has disrupted almost every physical activity, thereby disrupting the physical labour economy. The unfolding crisis across the country and  the poor health infrastructure especially in rural areas poses a major challenge to combat the spread of the virus .  According to the National Health Report, India’s government hospitals average a low figure of one bed per 1844 patients.  The magnitude of the health crisis becomes apparent with the inadequacy in health infrastructure in rural India. The ongoing COVID-19 crisis is reshaping the entire global economy and is expected to be a stress test for government institutions. Even after the crisis, policy making and social programs will remain the key areas in which continuous revision must happen – to build a resilient economy in the long run. As the pandemic influenced financial crisis looms large, it is opportune to discuss public employment programs in bridging infrastructure gaps and financial losses. 

     Demand driven workfare programs intend to provide 100 days of employment for rural households. This scheme was launched with an objective to alleviate poverty and create public assets.   Recognising the vagaries of the agriculture sector to provide stable employment, the program sought to guarantee minimum income for subsistence level labourers and also internalized short term shocks in the rural economy. In principle, the ‘right to work’ element offered a legitimate progress in public-policy discourse by empowering women and marginalized communities to work. The laudable results of the employment program have more or less achieved its social objectives by increasing individual asset creation and enhancing savings rate. Almost 50 percent of the population dependent on agriculture fall back to government employment schemes in times of labour market failure. Low productivity, inadequate modern technology, high dependence on rainfall and bottlenecks to reach the market are primary sources of such failures. Execution of public employment in India is  plagued by rampant corruption and efforts to effectively implement the scheme faces hurdles and results in marginal progress. In the wake of economic slump with falling consumption in rural India and high unemployment rates, infusing cash in the hands of people is always the priority. However, marginal increase in budget allocation for public work programs has invited criticism from the economists – expecting the rural economy to struggle with slow recovery. With acute shortage of skilled labourers and an education system failing to impart quality skill education, a public employment program can be more dynamic in resolving the socio-economic and food security problems. The primary objective is to offset short term economic disturbance and smoothen consumption expenditure, but the development of the program in responding to the needs of the community is also important.  Successful implementation of an employment program must factor-in convergence with other departments, quality of assets created and skill levels imparted under the program. .The three-week lockdown due to covid-19, further extended by two weeks, has exposed the inadequacy of public health infrastructure, more so in rural areas and for informal labour groups, to address their health and the resulting financial hardship. Converging the needs of villages to enhance better response during a crisis with the employment program would result in bringing accountability and creating assets.

    India has experimented with a plethora of universal public programs such as Public Distribution System and Integrated Child Development Scheme (ICDS). In a similar vein, MGNREGS has been an important public work programme with the aim of reducing poverty and enhancing income levels. At this juncture, revising and reviewing MGNREGA scheme with the objective to reduce leakage in the system is a priority. A clear balance between the twin objective of providing employment and creating infrastructure has been missing in the literature. The gap between theoretical policy and reality has raised  concern and the need to review the current approach . The obvious gap in infrastructure requirements identified during the time of crisis must converge with public programs. Such carefully designed schemes with tangible objectives will provide economic security in the short run and improve rural infrastructure in the long run. 

    Work completion rate can be used as a proxy for productivity because individual labour productivity is hard to ascertain with heterogeneous work projects. Although the official MGNREGA website suggests an average of 90 percent of work completion, open government data shows a decline in work completion rate from 43.8 percent in 2008-09 to 28.4  percent in 2015-16. Financial support through employment should account for both quality of assets created and the process of such creation. This would internally check and balance the operation of the scheme and intuitively bring in accountability. At present, the scheme contains the above mentioned elements but has not been used to evaluate the execution of the program. Convergence between departments to create assets and the work completion rate might explain the effectiveness of a program in physical terms. 

    An efficient model should enhance the skill levels of rural youth and is more than necessary to counter the loss of jobs already happening due to coronavirus lockdown. Unskilled and semi-skilled labourers will face lay-offs as industries with the recent norm on social distancing adjust to capital intensive businesses. The percentage of rural population in the age group of 15-59 receiving vocational training has reduced from 1.6 percent in 2011 to 1.5 percent in 2015-16. Unemployment rate among rural youth (15 to 29) has increased from 5 percent in 2011 to 17.4 percent in 2017-18. Although the highest unemployment rate is observed among rural females, the employability of rural youth reduces as education increases. The paradox of educated unemployment is not complex to decode, but a significant skill gap is the fundamental problem from the labour supply side. The Expanded Public Works Program (EPWP) introduced in South Africa to address the skill gap among the youth has succeeded in reducing poverty and unemployment rates. The program has been designed to create labour intensive projects not limited to infrastructure but extends to social, cultural and economic activities. The percentage of young workers under this scheme witnessed a rise from 7.73 % in 2017-18 to 10.06 % in 2019-20 in reference to the low levels of employment. This would mean the nature of the guarantee program has shifted from giving opportunities for seasonal unemployed to educated unemployed. The change is indicative of the deeper crisis faced in the rural economy and calls for a sustainable plan to use public programs as a tool to also impart skill training for the rural youth. State’s increasing dependence on work programmes to create employment needs to be revised based on community requirements. While enhancing rural employment is the immediate concern, the process of achieving it suffers from various executive problems such as corruption among government staff and individual’s lack of willingness to work. Amidst the lockdown situation due to COVID-19, unemployment will increase sharply. A well-devised strategy to address economic losses on priority and emphasis on health infrastructure through public employment must resonate in policy-making after the impact of the coronavirus crisis subsides. 

     

  • A Novel Behavioural Economics Nudge to Fight the Novel Coronavirus

    A Novel Behavioural Economics Nudge to Fight the Novel Coronavirus

    The last time that the Olympics and the Wimbledon were cancelled, were during the world war. Nuclear bomb was the weapon that ended the war. But what is the weapon that can end the war against this Covid-19?

    Research in behavioural economics finds that often one panics, or fears more than necessary, due to a bias in thinking that goes by the name of ‘Probability Neglect’; not considering the true probability of the event occurring, but being influenced by the gravity of the adversity.

    Cass Sunstein (Feb 28, 2020), who co-authored the book ‘Nudge’ with the Nobel laureate Richard Thaler for his contribution to Behavioural Economics observes in a column in Bloomsberg:

    ‘But one thing is clear: A lot of people are more scared than they have any reason to be. They have an exaggerated sense of their own personal risk.’

    A similar view has been expressed by Mark Travers (March 6, 2020) in the Forbes.

    The reasoning for several such publications advocating that panic on the grounds of a person contracting the virus, is unjustified goes something like this: The probability of a person contracting the virus is extremely low (of the order of .0001, which could vary depending on the place one lives and such other factors). Further, 80% of those who contract the virus need no hospitalisation and would recover as they would recover from a common flu, and the fatality percentage is very low – Although the overall fatality rate is about 2%, if the one who has contracted the disease is in his forties, the fatality risk is only about 0.4%.

    Though inordinate fear and panic may be unjustified from an analysis of the personal risk involved, such fear is functional, particularly in the context of the present scenario. Why? The measures to contain the pandemic are primarily social distancing and washing hands. These are to be practised by individuals, and so fear in the minds of individuals, would promote the effective practise of the measures needed to control the virus.

    It is here that I wish to segregate fear, in the context of this pandemic, into two categories: fear that stems from Concern for the Self and fear that stems from Concern for Others.

    Fear stemming from a Concern for the Self is the fear that grips one from the likelihood of being infected and the consequences one would suffer thereby. It is fear caused by one’s love for the self. Risk of one contracting the disease, being hospitalised and dying, was shown to be so low and consequently fear that stems from Concern for the Self, despite Probability Neglect bias, has been low. If this fear had gripped the public, the spread of the virus would have been arrested by people effectively practising social distancing.

    Fear stemming from a Concern for Others is the fear that grips one due to the consequences others would suffer due to one being infected. It is fear caused by one’s love for others, one’s fellow human beings.

    A brief analysis of consequences others would suffer, with a minimum of technicalities, is presented here. The primary purpose of these computations is to project in quantitative terms a realistic picture (erring on the conservative side without exaggerating) for one to appreciate. The next four paragraphs demand the reader to engage System-2 thinking. System-2 thinking is lazy, and behavioural economics predicts a disposition in the reader to skim through – discarding the matter as an elaboration of what is already known – without following the computations that demand System-2 effort. The author gently nudges, that the reader pursues through this difficulty for the next four paragraphs to truly place the consequences in the forefront of one’s consciousness. (For a detailed understanding of System-1 thinking and System-2 thinking, I recommend that the prudent reader consults ‘Thinking, Fast and Slow’, a classic authored by Daniel Kahneman (2011), another Nobel laureate, for his contribution to Behavioural Economics.)

    A parameter R0, Basic Reproduction Number, refers to the mean number of individuals an infected person directly infects. It would be appropriate to consider R0 = 2, a conservative value for the current corona virus crisis. Another variable is the Generation Time, the mean time that an infected person takes to infect another person, since being infected. It would be appropriate to consider a value of 7 days (1 week) as the Generation Time for this virus, since this virus starts infecting others even before one is diagnosed with the disease.

    Considering the above mentioned values, an infected person, whom we will call Mr. Prime, would have infected two others after one week (Generation Time). After two weeks the two others infected, would have infected four others. Thus the total number infected by Mr. Prime at the end of two weeks is 6 (2 directly infected by Mr. Prime at the end of one week + another 4 indirectly infected by Mr. Prime at the end of two weeks). Continuing this way, at the end of four Generation Times (4 weeks), the numbers infected by Mr. Prime would be 30. The reader is encouraged to check this out by simple mind arithmetic. To aid one’s memory, if we approximate 4 weeks as a month, it is easy to see that in 30 days Mr. Prime would have effectively infected 30 others.

    Extending this further, one can see that in two months (8 weeks), Mr. Prime has been the sole cause for effectively infecting 510 people. (Research in behavioural economics foresees that a few prudent readers may observe that the number infected ought to be 900 and less prudent readers may suggest the number 60, and only few would agree with the number 510 as proposed by this author. This is the influence of the gullible System-1 thinking. Effortful System-2 thinking can however, lead a prudent reader to see that the number infected is indeed 510, under the given considerations.)

    We further examine the consequences of people getting infected. If Mr. Prime has infected about 500 people in two months, 20% of them would get (or shortly would be) hospitalised and 2% of the 500 would die. Thus Mr. Prime would have been responsible for hospitalisation of 100 people (contributing to the mayhem for the demand of ventilators) and for the death of 10 people (2% of 500). It can be said that Mr. Prime, by having not taken steps to prevent himself from being infected, has effectively killed ten people; a case of serial homicides by negligent behaviour.

    A corona infected person turns out to be a serial killer even before he or she has been diagnosed with the virus, and has no control over the serial killing sequence that has got triggered. Generally when a person is sick, people’s sympathies are with him or her and the sick person is seen as a victim. But the foregoing analysis shows, a corona infected person as a perpetrator. Not a very comforting perspective, as no one wishes to be a serial killer. Another way of describing the corona virus could be as a virus that when it infects, a normal human being turns into a serial killer, like a psychopath (-that you fall sick is a small matter).

    But this perspective has potential to induce a very functional fear, panic, of having blood on one’s hands. This fear can lead to people being paranoid about being infected by the corona virus. Well, this fear bordering on panic and paranoia could be an effective weapon to stop the pandemic from spreading.

    Are all those who have been diagnosed with Covid-19 guilty of being serial killers? The answer is no. Though they have indeed turned out to be killers, they are not guilty of being killers; they had not seen the virus from this perspective at the time of their being infected. But, despite being sensitised to this perspective, if one had not turned every stone to take the precautions, and had ended with an infection, yes, he indeed is guilty of being a serial killer.

    The war against Novel Corona virus can indeed be fought with the functional fear that stems from Concern for Others, love for your fellow human being; and not from fear that stems from Concern for the Self.

    A gentle nudge: Love your neighbour as yourself to end this war.

     

    References:

    Sunstein, Cass R; Feb 28, 2020; ‘The Cognitive Bias that Makes Us Panic About Coronavirus’, ‘Technology and Ideas’, Bloomberg

    Travers, Mark; Mar 06, 2020; ‘Psychology Research Explains Panic Over Coronavirus – and How You Can Calm Down’, Editor’s Pick, Forbes

    Kahneman, Daniel; 2011, ‘Thinking, Fast and Slow’, Allen Lane, Penguin Books

     

    Image Credit: Evgeni Tcherkasski on Unsplash

  • COVID-19: Coronavirus highlights the class divide in India

    COVID-19: Coronavirus highlights the class divide in India

    It would indeed be revealing, as well as quite embarrassing, particularly for the privileged middle and upper classes, if a survey is undertaken to locate and spot the residential blocks in the different cities of India where the instances of COVID-19 cases have occurred. That will also show how and from where the infection is spreading to other people and other localities. It is not at all difficult to do that; mapping through GIS is an easy exercise

    Needless to say, almost all of these cases surely are in the neighborhoods inhabited by the richer and privileged sections of the society, and most of them are those who have a travel history of having been abroad. After their return they have infected those who have come in contact with them.

    Fine, many of them have been isolated or quarantined, if not actually hospitalised, and as a consequence of the lockdown have the extravagance of ‘work from home’ (it is another matter that post-lockdown the TV viewership has increased sharply). Many of them also have the advantage of drawing their regular, guaranteed salary at the end of the month.

    At the other polar opposite of the class edifice, at the bottom of the pyramid, are the multitude of hapless groups of people, sections of our own society, the ‘others’, who for absolutely no fault of theirs, not to talk of any crime committed, have overnight been thrown out of everything — jobs, wages, shelters, source of income, and the like. This was because a nation-wide lockdown was imposed as a result of the overseas excursions of those at the other end (the upper end) of the class hierarchy.

    Besides the urban homeless and the needy, those who have been made to bear the brunt of this lockdown are the migrant labour who have become, during the last few years, a given in most of our cities and town. These migrant workers (aka ‘guest’ workers) are reluctantly accepted in many places; mainly because they come cheap and the ‘locals’ mostly refrain from doing certain kinds of jobs in the vicinity of their own habitations and locales (they may, however, do more demeaning jobs away from their own dwellings, say in West Asia/Gulf or other overseas contexts). These ‘guests’ are now being thrown to the wolves and the weather.

    As the State had no contingent plan for these migrant labour, an institution-created famine-like situation has arisen due to the starvation that they have been facing. After five days of lockdown the central government woke up to the misery of these souls and directed the state governments and the union territories to provide shelter and food to them. In the interim these people had a choice; either starve to death or risk breaking the physical distance barrier and get susceptible to the virus. Hopefully, now that their plight has been highlighted, things will get better for these ‘guests’.

    The luxury of the so-called social distance does not operate in their ambit as lower class habitations as also other allied spaces that pertain to them are extremely dense by definition. Almost all seem to have chosen the option of reaching their respective homes going by the thronging witnessed at bus stops and highway halting points for buses and trucks. However, to no avail as the states in their wisdom have shut all borders for them by suspending all forms of transport.

    During Partition in 1947, people moved due to issues between the two countries. Now the mass movement of people is also because of a partition — a partition between the rich and the poor, within the national borders, across state borders wherein each state is guarding its territory with vehemence. The State has failed utterly on two counts; one, in not anticipating such an event, and second, in not being able to either prevent or combat the movement.

    It is really poignant that the choice is between death by hunger and death by the virus. Given such a choice, the poor feel it is better to die in their native place than in a strange locale. Also, if they do beat starvation death and live, the chances of recovery and survival from the virus appear to be higher even if they are infected. It is death by starvation that is most galling for them as evidenced by empirical responses that are obtained by sources that are interacting with them.

    It is such an unfortunate thing that all crises always seem to impact the poor in the worst negative way possible. Floods, droughts, hurricanes or what have you invariably target the less privileged. It is utterly ironical that the present crisis that has emerged among the upper echelons in India due to Covid-19 too does so.

    It is also pertinent to point out as to how the ilk of the original carriers of the virus, the upper classes, are planning their strategies in combating the absence of their domestics, cooks, drivers as can be ‘seen’ from the debates and dialogue of the resident welfare associations and similar bodies on social media. The dominant narrative is ‘no work, no pay’. Those who say they will pay, are making it sound as if they are achieving martyrdom by their act.

    This article was published earlier by “Moneycontrol

    Views expressed are the author’s own.

    Image Credit: www.ft.com