Priyanka Dash

UM19364
Section-F
EEB END TERM ASSIGNMENT

Q1. Identify the sectors, where the global pandemic has generated more opportunities in few
businesses and people employed in those sectors, while bringing the colossal losses for all other
businesses and the people employed in the world economy. Discuss what kind of suitable monetary
and fiscal policy measures can be undertaken by the developing economies like India in the current
state in order to overcome such economic crisis in most effective ways by restricting the financial and
real losses to minimum level and not allowing economy to enter into severe recessionary
phase(secular stagnation). Since the developing economies do not have adequate financial and real
resources to control such pandemic and therefore overcome the economic recession, in case you
suggest that the developed economies should financially support the developing economies along
with the aid flows from multilateral institutions like IMF and World Bank, justify why the developed
countries should provide the required financial support to the developing economies to stem such
health and economic crisis.

Answer:
The global pandemic- COronaVIrus Disease or COVID-19 has been making infinite
rounds in the news since its onset. It has affected 203countries and 2international
conveyances: The Diamond Princess and MS Zaandam. There is a total of 936,237cases
worldwide out of which 47,249people have been killed by the novel Corona Virus,as on
April 2nd,2020.
The health effects of COVID-19 are well known but what concerns economists now are
the economic effects. The international markets like Dow Jones(-24.1%), Nikkei(-22.2%)
and the FTSE(-28.8%), have seen some of their sharpest falls since the inception of the
coronavirus since December 2019. (Figures as on 1st April,2020)

Economists are predicting a recession far-worse than the one after the World War II,
however, if we consider the silver lining of the COVID grey-cloud, we witness that a few
sectors are now booming since its onset. The sectors are as follows:
1. Healthcare Sector:
a. Companies producing hand sanitizers and liquid hand wash have seen a
steep rise in sales since the COVID-19 inception. The stores are on a
regular stock out since WHO has directed people to wash hands frequently
to avoid getting infected.
 b. Companies that produce surgical masks, specialised masks and gloves
have seen a steep rise in sales as people are conscious about stepping out
without protection.
2. Sustainability & wellness sector:
During this critical time, people have understood one thing: “Immunity is the
saviour”. People have started to focus on consuming supplements that aid to
better immunity and overall well-being and have also started to take up online
yoga/exercise classes to build up vitality.
Example:
 Live broadcasts of fitness classes have seen a 513% spike on their
online platform.
 Sales of indoor sports equipment have also been witnessing a rise
in their sales.
 Pharmaceutical companies that produce health supplements are
witnessing a rise in sales.
3. Online Doctor Consultation:
Since people are now restricted to their homes due to lockdowns, they consider
taking doctor consultation online.
Example: Ping A Good Doctor,a Chinese app, has witnessed a 900% increase in
number of customers and 800% increase in number of consultations in January
2020, compared to December 2019.
4. Grocery/Medicine delivery apps:
Apps have seen a sharp rise in their customer base and orders since customers
find it convenient to order essential items at home, than risk their health by going
out. They have now also introduced “No-Contact-Delivery” option where the
delivery agent leaves the order at the door/gate without making contact with
customer.
Alibaba’s delivery app,Fresh Hema,recorded 100k downloads in a single day in
February,compared to approximately 29k/day in 2019!
5. Online Education/Remote Learning and Remote working platforms:
 Students and teachers throughout the world are switching to remote
learning platforms to ensure continuity in education,despite the pandemic.
 Since working people, too, are confined to their homes, they’ve switched
to online platforms like Zoom, etc, to ensure Business As Usual (BAU) for
their companies. Zoom witnessed a rank increase from #180 in January to
#28 in late February, in terms of popularity and downloads.
6. Entertainment: Gaming,non-gaming,VoD(Video on Demand)
 The gaming apps industry in China has witnessed an explosion in terms of
downloads. They’ve recorded 222 million app downloads of games and
other apps since 2nd February which translates a 40% hike than usual.
  Netflix, Amazon prime and other regional VoD platforms also witnessed a
steep rise in their customer base.

The monetary and fiscal policies that developing countries like India can take to ensure
they don’t face severe financial or real losses and don’t enter secular stagnation are:
 Many companies aren’t giving a raise this year and even introducing pay cuts due
to heavy losses. The governments can provide tax subsidies to affected industries
and their workers.
 The RBI has given an extended moratorium period of 3 months to loan takers.
RBI has also reduced the rate of interest of loans by 75 bps. More such relaxations
should be implemented.
 People losing their jobs should be able to avail some basic pay from the
government till they are re-employed.
 Central banks can also increase money supply as a party of expansionary
monetary policy.

I would further suggest developed countries to also aid developing countries, along with
the aid flows from multilateral institutions like IMF and World Bank, during this time of
crisis due to the following reasons:
1. Any epidemic that develops in a developing country with mediocre healthcare can
pose serious threat to the developed countries too. The needs to be curbed and
developed countries can share their research and their medicines for the
betterment.
2. Developed countries have many jobs outsourced to the people in developing
countries. Ill workforce=added losses.
3. Developing countries are the worst hit in such times and low finances further hurt
the spine. Financial assistance will ensure people have food to eat and can focus
on skill development and job acquisition.
(2)Describe India’s expected demographic transition over the period 2030 and 2050 as estimated by
Population Division of UN or other national statistical agencies comparing the demographic transition
of China(ignoring the effects of current global pandemic on their population structure), and discuss
how India can maximise from the current and future demographic dividends over the long-run by
linking its demographic features with aggregate savings, investment (business expansion) and
economic growth rate. Given that the spread of recent novel Corona virus (Covid-19) had its effects on
the global population and leading to the change in the structure of the global population, suggest the
measures which can be enforced at the international institutional levels so that same can be complied
or enforced at the national level in ensuring safety of the human beings and animals in this
interconnected globalised world economy in the future.

Answer:

Demographic Transition is basically the activity in which a nation’s mortality rates and birth
rates fall with increasing economic advancements. Since mortality rates decline slower than the
birth rates, the nation happens to witness a rapid increase in its population, in short term.
The current population of India and China are estimated1.37 and 1.39 Billion respectively.
Estimates suggest that by mid-2030, India would have surpassed China by 8%, and by 2050,
India would be 25% more as, India’s population would be around 1.53B in 2030 and 1.68B in
2050. Whereas, China’s population will reach 1.42B in 2030 and then fall to 1.34B by 2050.
The CAGR (Compound annual growth rate) of India’s population between mid-2018 to mid2030
is estimated around 0.93% and is estimated to fall to 0.46% during 2030-2050. China, however,
will have CAGR of -0.27% during 2030-2050. We can record a clear case of demographic
transition for India during the 2 decades and this will lead to a decline in the world population
share contributed by India, then what it is now.
Also, India has the greatest advantage of demographic dividend which ensures India’s steady
growth. Every year, for the next 5 years, over 15 million youngsters will enter the workforce.
However, over 75% of them won’t be employable, due to lack of skills. It is only the
acquirement of skills that will move the Indian workforce from the informal to the formal sector
and will open many investment opportunities. The introduction of GST also helped in
formalizing many sectors. India contributes 18% of the world’s population with 250million
workforce and demographic dividend has historically contributed upto 15% of the overall growth
in the developed economies and India conveniently places itself in this. Thus, there are huge
investment opportunities in the manufacturing services sectors which can utilize the incredible
skilled workforce.
Skill India initiative, launched in 2015, is a program to train and develop industrial,
entrepreneurial skills among Indians. It mainly targets the youth which needs to be employed or
start new businesses. The Pradhan Mantri Kaushal Vikas Yojana (PMKVY) provides short term
training to everyone, including school/college dropouts and unemployed people. It provides
essential skills like financial and digital literacy. It also provides recognition to previously learnt
skills if the applicants appear for relevant exams. To aid this, also a skill loan scheme was
provided to the people who wished to undertake skill development courses.
The government can introduce free courses at district level so that people who do not have access
to internet, can become skilled. Better skills=higher probability of being employed.
Furthermore, in terms of Ease of Doing Business, India raised 30 rankings in the top 100
rankings on World Bank’s Ease of Doing Business Index, 2017. Greater ease of doing business
means better investment opportunities to the investors and hence it is directly correlated with
higher GDP per capita in the long run.
Fighting CoronaVirus:
As we all know the health effects of COVID19 but the economic effects are going to pose a
serious threat the economies and hence jobs. Also, the fact that the health of workforce is being
affected makes us emphasize on prevention, than cure.
Economies can take the following measures to ensure safety of the human beings and animals in
this interconnected globalized world economy in the future:
1. Ban the trade of wildlife for food.
2. Regulate food policies so that people don’t consume exotic and wrong things at the first
place (like bats, pangolins, cats, dogs, etc).
3. Focus on immunity build-up of the masses. Studies show that COVID19 doesn’t have
great effect on Indians as compared to Americans because India had mandated the usage
of the BCG vaccine to prevent tuberculosis whereas USA had not. Due to this vaccine,
Indians are immune to other lung diseases or at least do not suffer as much.
4. Focus on the development of coronavirus vaccine and make it compulsory for everyone
to ensure this virus doesn’t claim any more lives.
5. Develop hygiene protocols so that even if a disease breaks out, it doesn’t spread.
6. People wont stop consuming non-veg items like chicken, mutton, fish and beef. The
health departments can focus on vaccinating animals so that they don’t contract diseases
like the avian flu, swine flu, etc. Also, the place of sale of the meat should be regularly
sanitized and this shouldn’t be compromised at any cost.

I believe that if the above steps are followed, we can ensure that humans as well as animals can
stay safe.

Thank you!

References: Population Reference Bureau (PRB), Economic Times, The Hindu, Hindustan times, Population Division of UN.