Unlocking insights | Value Research Quest for a reliable indicator for India's post-COVID recovery
Everyday Economics

Unlocking insights

Quest for a reliable indicator for India's post-COVID recovery

Unlocking insights

Sometimes a single cartoon caption can capture the mood of the people and the state of the economy better than any statistics, surveys or census can. One such candidate is the viral 'New Yorker' cartoon of a man and a woman sitting at a home entrance, looking out at the stretch, with the caption: "Did you hear that? I think that was the sound of New York coming back". The worst of the second wave of the COVID crisis for economies in many countries is now over. They are progressing rather well on the goal of inoculating critical proportions of their adult populations. They have begun to re-open their economies. Economy watchers in these countries are focusing on assessing the trajectories of the recoveries, and have drawn up interesting new indicators to track for getting a sense of the speed and strength of the recoveries.

In all probability, work from home may have peaked already - Goldman Sachs' decision to reopen (as against Citigroup's call to keep its offices closed) brings back its employees in New York to office, and may be the inflection point for the finance industry in lower Manhattan. Economists believe that more and more offices following suit across industries will draw to an end the 'peak sweatpants phase' of the COVID economy. And so, monitoring sweatpants sales will give them insights into the recovery's robustness. US economists did not emphasise tracking sales of office wear. People may already have wardrobes full of outfits. Or may be buying more, even while not working or still working from home, just because they miss going to office. The reason is that a part of office-wear sales may be driven by emotional decisions rather than in preparation of resumption of economic activity. On the other hand, decreasing need for sweatpants does to a large extent indicate reduced use, most likely triggered by a return to pre-pandemic life schedules.

India's economy is not as dominated by corporate offices that home-wear sales could be used as an indicator for its recovery. So, what would be an indicator for India? Ask Indian economists and they'll dismiss the idea, alleging lack of good-quality data truly representative of behaviours and serious link with the economy. Ask non-economists and they are most likely to favour tracking the number of vaccine doses administered. The logic behind it is not very clear but a commonly-held belief is that vaccine doses administered are evidence for economic recovery. Vaccinating large numbers quickly can reduce the impact of the health crisis and hasten the return to normalcy, facilitating economic recovery. But the link of the data of vaccines doses administered with levels of economic activity is not clear. For instance, it doesn't capture the levels of vaccine hesitancy. The vaccine hesitant may return to work uninoculated once the second-wave lockdowns end. Or, the large proportion of unformal workers in India may simply not have the luxury to wait till they can get vaccinated to return to work. Another recommendation economic analysts offer is tracking the sales of eggs, which seems somewhat counter-intuitive for a country such as India, given the general impression is that food habits and choices are believed to be vegetarian. India's per capita consumption has shot up to 81 eggs a year from 75 in 2019 () presumably because eggs are easy to cook, just like instant noodles, for people stuck at home now, with no recourse to office or hostel canteens and eateries they normally rely on.

Food expenditure still forms a large proportion of the monthly household consumption basket in India, although it has been decreasing over time, as spending on other heads increases, and that is why the inflation indices also give high weightage to food items. This is true for countries not as developed as the large advanced economies. Last year, glucose-biscuit sales had similarly become an indicator of the initial impact of the first-wave lockdown in India (https://bit.ly/3iSzOY5). Parle G biscuits are to the working class what eggs are to the somewhat better off. Its manufacturers say the brand is anyway the world's bestselling biscuit by volume, with more than a billion packets made every month. But in March 2020, these biscuits became the essential food item large sections of the population, from migrant workers returning home from cities brought to a halt by the lockdown to students stuck in hostels, relied on to beat the sudden impact of the lockdown.

Economic data tends to come with lags, especially in India. Often, it fails to capture properly the state of the economy, as observed on the ground, on account of methodological deficiencies or collection challenges. Careful analyses that extract useful information from alternative sources can come in handy then. During the lockdowns, economy watchers tracked mobility data from mobile devices. Those analyses have unlocked remarkable insights into the nature of the impact of measures instituted by governments in response to the pandemic. A new study of the walking patterns of 1.62 million anonymous users in 10 metropolitan areas in United States cities for the period from mid-February 2020 (pre-lockdown) to late June 2020 (easing of restrictions) shows dramatic declines in walking, particularly utilitarian walking, while recreational walking has recovered and even surpassed pre-pandemic levels (https://go.nature.com/3gDbMid). The average distance walked in all 10 metropolitan areas - New York, Los Angeles, Chicago, Boston, Miami, Dallas, San Francisco, Seattle, Philadelphia and Washington DC - has dropped by half. Number of walks is down 70 per cent. Before COVID-19 lockdowns, people living in high-income areas walked less than those in low-income areas. This pattern reversed. Walking levels recovered to pre-lockdown levels in high-income areas, as people substituted utilitarian walking activity for more leisure walking.

In low-income areas, where walking behaviour of people from socially disadvantaged areas are more dependent on public-transportation use and where the physical environment is less conducive to walking, lockdowns had a larger impact. Walking levels are still well below pre-lockdown levels. This suggests that the impact of COVID-19 on health inequalities will come from not just virus-related infection and mortality rates but also as consequences of the policy responses by governments. Impact of the lockdown restrictions on physical and mental health will show differently on sections of populations depending on their access to green space and urbanity. Analysts of the Indian economy use mobility data to assess the return path to the normalcy level of economic activity post lockdowns. Detailed analyses may yield more insights and help understand better the COVID economy here.

Puja Mehra is a Delhi-based journalist and author of 'The Lost Decade (2008-18): How India's Growth Story Devolved Into Growth Without A Story'

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