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Business News/ Opinion / Views/  We face a behavioural challenge like no other
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We face a behavioural challenge like no other

Reckless abandon is rife and future covid waves would give our economy the chance of only a jagged recovery at best. We must nudge people to behave better as part of a risk reduction plan

Photo: AFPPremium
Photo: AFP

That a release from cabin fever could spark irrational exuberance was a given, and also easy to empathize with, but the reckless abandon on public view as India’s big urban sprawls unlock has fanned rational fears of a third covid wave that could potentially exceed the second with its ferocity. Packed markets, overcrowded malls, bustling restaurants, revelry after sundown and traffic jams along getaway routes suggest too risky a sigh of relief being taken by us. As Sars-CoV-2 is airborne, its indoor risk of infection shoots up as the count of exhalers in a given space rises, even as how well Aarogya Setu works as a virus filter remains a wild guess. Regardless, a popular mall in Delhi recorded 19,000 footfalls on a single weekend, and its swarms were not too exceptional. Health experts are aghast. The pandemic’s daily case count may have dropped to almost a seventh of its 414,000-plus peak hit on 6 May, but it is still too high. Mutations that could spring nasty surprises are yet to be mapped adequately. Our vaccine cover could take at least till year-end to grant us some crowd safety by means of ‘herd immunity’, by which the few left unjabbed tend to get ring-fenced by the many who’ve got jabs. Today, a sharp covid slide-back imperils both our health and economy, and we cannot afford to let this problem go unaddressed.

On the economic front, we should be thankful for the commercial agility that allowed us to surf our second wave better than the first, with fewer disruptions of supply amid a demand slump and superior mop-ups of tax. In the first two-and-a-half months of 2021-22, India’s direct tax collections, at nearly 1.86 trillion, were double the figure logged in the same period a year earlier, when our covid clamps were at their tightest. Plus, in April, industrial production was up 134% from a year earlier. The corporate sector has proven resilient, especially on costs, as reflected in profitability gains made under a sales squeeze. Small firms fared worse, though job losses were fewer this time round and our support systems for the covid-hit have been of some aid. The Reserve Bank of India (RBI) projects an expansion in output of 18.5% this quarter, year-on-year. On a quarterly base that lost nearly a fourth of its size last fiscal, this would still leave us short of 2019-20’s first-quarter output figure. For all of 2021-22, RBI has slashed its growth estimate from 10.5% to 9.5%. However, should this year’s recovery be a story of fits and starts, as our covid scenario portends, a jagged path ahead would reduce confidence in that forecast. Inflation is already above RBI’s comfort zone, and if a release of pent-up demand tilts a few scales the wrong way, or we see a reversal of capital inflows and a rupee slide, runaway prices could put monetary policy on the wrack and raise the risk of stagflation.

As much depends on how the pandemic pans out, policy attention should focus on India’s behavioural challenge. Our mix of rules and advisories, backed on occasion by exhortations by leaders, has not been effective in ensuring covid-appropriate behaviour. This is a cause for anxiety. Between hard and soft restraints, however, there exist a range of incentives that could be deployed. The lessons of behavioural economics could yield novel ways to ‘nudge’ people into acting responsibly, perhaps as part of a larger plan backed by a mass campaign. We need to hunker down, widen our covid debate, and make space for ideas to emerge

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Published: 20 Jun 2021, 09:36 PM IST
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