Daily Editorial Analysis for 24th August 2021

GS PAPER I

Tauktae, Yaas and planning for the next

Why in News

• The severe cyclones, Tauktae and Yaas, which battered India earlier in 2021, made landfalls on the country’s western coast, Gujarat, and the eastern coast, Odisha, on May 17 and May 26, 2021, respectively.
• Both storms caused massive damage to infrastructure, the agricultural sector, and houses.

More frequent

• Increasing sea surface temperatures in the northern Indian Ocean and the geo-climatic conditions in India have led to a rise in the frequency of devastating cyclones in the coastal States accounting for 7% of the global tropical cyclones.
• Every year, around five to six tropical cyclones are formed in the Bay of Bengal and the Arabian Sea; of these, two to three turn severe.
• The Indian coastline is around 7,500 km; there are 96 coastal districts, with 262 million people exposed to cyclones and tsunamis.
• The World Bank and the United Nations (2010) estimate that around 200 million city residents would be exposed to storms and earthquakes by 2050 in India.
• Between 1891 and 2020, out of the 313 cyclones crossing India’s eastern and western coasts, 130 were classified as severe cyclonic storms.
• The west coast experienced 31 cyclones, while 282 cyclones crossed the east coast.
• The Odisha coast witnessed 97 cyclones, followed by Andhra Pradesh (79), Tamil Nadu (58), West Bengal (48), Gujarat (22), Maharashtra/Goa (7), and Kerala (2).

The economic costs

• Among the natural disasters, cyclones constituted the second most frequent phenomena that occurred in 15% of India’s total natural disasters over 1999-2020.
• During the same period, 12,388 people were killed, and the damage was estimated at $32,615 million.
• Cyclones are the second most expensive in terms of the costs incurred in damage, accounting for 29% of the total disaster-related damages after floods (62%).
• In addition, they are the third most lethal disaster in India after earthquakes (42%) and floods (33%).
• However, fatalities due to cyclones declined from 10,378 in 1999 to 110 in 2020; the significant drop was on account of improved early warning systems, cyclone forecasting, and better disaster management activities such as timely evacuation, rehabilitation and relief distributions. But these measures are not adequate to achieve a zero-fatality approach and minimise economic losses from cyclones.
• Between 1999 and 2020, cyclones inflicted substantial damage to public and private properties, amounting to an increase in losses from $2,990 million to $14,920 million in the absence of long-term mitigation measures. In addition, damages caused due to cyclones increased nine times during the same period.
• As stated earlier, cyclones also led to an increase in the fiscal burden of governments through increased spending to implement effective cyclone preparation measures.
• As a result, direct government expenditure on natural calamities increased 13 times. The Asian Development Bank’s report in 2014 estimated that India would suffer a loss of around 1.8% of GDP annually by 2050 from climate-related events.
• India lost around 2% of GDP and 15% of total revenue over 1999-2020.
• According to the Global Climate Risk Index report 2021, India ranks the seventh worst-hit country globally in 2019 due to the frequent occurrence of extreme weather-related events.
• Moreover, the report showed that India lost around 2,267 human lives, while damages stood at $68,812 million in Purchasing Power Parity (PPP) terms in 2019.
• In the same year, India ranked first concerning human deaths and economic losses due to extreme weather-related events (Eckstein et al., 2021).

Measures in Odisha

• In the aftermath of the 1999 super cyclone, the Government of Odisha took up various cyclone mitigation measures which included installing a disaster warning system in the coastal districts, and construction of evacuation shelters in cyclone-prone districts.
• Other steps were the setting up of the Odisha State Disaster Management Authority (OSDMA), conducting regular cabinet meetings for disaster preparedness, and building the Odisha Disaster Rapid Action Force (ODRAF).
• All these activities have helped to minimise the toll from cyclonic storms such as Hudhud, Fani, Amphan, and Yaas.
• Still, Odisha’s disaster management model is inadequate to minimise the economic losses that result from cyclones.
• Therefore, the Government of India should adopt a few measures to minimise disaster damage and fatalities.

Essential steps

• First, it is imperative to improve the cyclone warning system and revamp disaster preparedness measures.
• Second, the Government must widen the cover under shelterbelt plantations and help regenerate mangroves in coastal regions to lessen the impact of cyclones.
• In addition, adopting cost-effective, long-term mitigation measures, including building cyclone-resilient infrastructure such as constructing storm surge-resilient embankments, canals and improving river connectivity to prevent waterlogging in low-lying areas are important.
• Third, installing disaster-resilient power infrastructure in the coastal districts, providing concrete houses to poor and vulnerable households, and creating massive community awareness campaigns are essential.
• Finally, healthy coordination between the Centre and the States concerned is essential to collectively design disaster mitigation measures. It is only such a collective mitigation effort by the Centre and States that can help reduce the fiscal burden of States and also be effective in minimising disaster deaths.

GS PAPER III

The Indian economy is struggling to recover

Why in news

• The International Monetary Fund (IMF)’s July version of the World Economic Outlook Update emphasizes a dangerous divergence in economic prospects between the advanced countries and emerging economies.
• The global economy is projected to grow at 6% in 2021, a figure which is unchanged from the IMF’s April forecast. However, this is yet another instance where averages are misleading.
• While the forecast for advanced countries has been revised upwards, prospects for emerging countries and particularly those in Asia are projected to be somewhat worse.

Quick pace of recovery

• This divergence in the pace of recovery from the pandemic is attributed mainly to two factors.
• First, there has been a huge difference in the pace of vaccine roll-out between the advanced and the emerging and low-income countries.
• The advanced economies have allocated large sums in procuring COVID-19 vaccines on a priority basis.
• Even the Trump administration, not known to be one with a human face, was proactive in transferring large sums to several pharmaceutical companies as soon as the magnitude of the global health crisis became apparent.
• This enabled the companies to develop and produce vaccines at breakneck speed.
• According to the Centers for Disease Control and Prevention, pre-orders have enabled the U.S. to fully vaccinate over half the total population while over 60% have received at least one dose.
• The U.K. has also done exceedingly well in its vaccination drive.
• The European Union countries were slow off the block, but have now started vaccinating their population at an impressive pace.
• Overall, over 40% of the population in advanced economies has been fully vaccinated.
• Compare this with just 11% in emerging market economies. At any rate, unless something goes dramatically wrong, the possibility of large-scale lockdowns in these countries has receded.
• Second, the advanced economies have been able to use their vastly superior fiscal situation to implement significantly bigger stimulus packages.
• Apart from allocations designed to directly support domestic industry and growth, sizeable income support measures have been provided that have both propped up consumer demand and mitigated extreme hardships to thousands of people.
• This kind of fiscal support promises to continue well into 2021. These measures have ensured that advanced economies do not suffer the kind of damage witnessed elsewhere and have also accelerated the pace of economic recovery.

A laggard

• The Indian economy has been one of the laggards among the emerging market economies. After the first COVID-19 wave, it contracted by over 7% during 2020-21.
• This earned India the dubious record of being the country with the worst performance among all major world economies.
• Earlier projections claimed that the economy would grow at over 10% during the current year.
• However, no one had taken the severity of the second COVID-19 wave into account.
• The dislocations caused by the pandemic have resulted in lower growth estimates for the Indian economy.
• Although growth is muted and recovery is slow, retail inflation has crossed 6%, which is above the Reserve Bank of India (RBI)’s ‘safe’ level.
• Food prices too have played their part in contributing to the overall rate of inflation.
• This is a serious matter since the poor are particularly hard hit if food prices cannot be controlled.
• The overall price situation puts the RBI in a quandary.
• Consumer spending has also been extremely sluggish and shows no signs of picking up.
• For instance, Google Mobility Index data showed that, visits to retail establishments including restaurants, cafes and shopping centers were down 20% compared to a pre-COVID-19 baseline.
• Sales of consumer durables are yet to pick up.
• Not surprisingly, business confidence is low and so entrepreneurs are wary of making new investments. This is evident from the fact that bank credit to the commercial sector has plummeted.
• The last component of domestic demand is government spending. But the government too has cut back spending as a proportion of GDP.
• Fortunately, Goods and Services Tax collections have been extremely good and this may induce the government to loosen the purse strings during the rest of the financial year.
• Much will depend upon the progress of the pandemic in the near future.
• However, the different variants of the virus and their differential transmission rates make it difficult to predict the spread of infection and hence the extent of economic disruption, although the current wisdom seems to be that vaccines are very effective in preventing serious illness.

Source of disquiet

• India was known as the ‘vaccine capital’ of the world; yet the spread of vaccines has been abysmal. There is no doubt that the Central government was rather complacent in 2020.
• Unlike in the U.S., there was no attempt to accelerate production facilities in companies like the Serum Institute of India.
• The devastation caused by the second wave seems to have induced a sense of urgency in the Central government, which has now become more proactive.
• Nevertheless, it is unlikely that the Central government will be able to achieve its target of vaccinating all adults by the end of the year.
• Recently, Pfizer released data showing that there is a slight fall in protection against any symptomatic infection six months after immunisation, though protection against severe COVID-19 remained at nearly 97%.
• However, it is becoming clear that the virus is clever at evading the defences created by vaccines.
• In particular, there is now evidence which suggests that the Delta variant can cause breakthrough infections, several people are being infected even after being fully vaccinated.
• For instance, Israel, which implemented a very successful vaccination campaign, has witnessed an alarming rise in new infections.
• This has prompted Israel to offer a third dose of the vaccine to anyone above 60 years who was vaccinated at least five months earlier.
• Germany too has decided to offer booster doses to the elderly.

Conclusion

• Any need to provide booster doses will aggravate the existing shortage of vaccines in the country.
• This puts a question mark on whether we will soon witness the resumption of robust sustainable growth.