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WHAT DID THE NGT RECOMMEND?

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Due to the alarming findings of the report, the tribunal recommended that a ‘polluter pays’ principle should be applied to fine those who waste water. The report filed by the committee went on to describe, “In case water consumption is highly excessive, the consumer should be charged with higher tariffs for overuse.” Instead of having a free for all system, the panel recommended that there should be a system whereby those who use more, pay more. The system of more consumption, higher the tariff, along with an efficient monitoring system for water consumption, would minimise water wastage.

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FOOD AND FUEL INFLATION: INDIVIDUALS AND BUSINESSES SUFFER

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Business and economy sections of newspapers during the Covid-19 pandemic have featured similar headlines everyday, mostly related to prices of commodities, including raw materials and consumer goods, which continue to rise, along with unemployment levels, while economic growth is spiraling to record lows. In May 2021, Wholesale Price Index-based inflation rose to a record high of 12.94 per cent, pushed by higher fuel and commodity prices while retail inflation touched a high of 6.3 per cent in the same month. As Covid-19 cases in India reduce after a devastating second wave, inflation continues to haunt Indian households, as prices of all commodities increase.

Photograph by Creative Commons

Consumer Price Index (CPI) measures the cost of a fixed basket of goods and services bought by a typical consumer over a year. It is a macroeconomic indicator that measures inflation and monitors changes in the cost of living. A healthy CPI is critical to maintaining money supply and ensuring price stability in India.

The rise in retail inflation across the country is directly proportional to a rise in food inflation. During the first wave of the Covid-19 pandemic, after the sudden announcement of a national lockdown, the agricultural supply chain across the country was severely disrupted. This caused a sharp rise in food inflation. The pandemic, which has already negatively affected the economy by pushing unemployment to an all-time high of 7.11 per cent in 2020 (Centre for Economic Data and Analysis, CEDA) and has resulted in lower incomes, is now threatening to increase malnutrition and nutritional poverty by pushing millions of people to lower their expenditure on food.

Food inflation hit a high of 13.63 per cent in December 2020 and reduced marginally to 8.76 per cent in March 2021. However, since the onslaught of the second wave of the Covid-19 pandemic, food inflation in the country has been much higher than the RBI’s mandated 6 per cent upper limit, while economic growth in the country touches record lows with every economic prediction. Economists state that a sustained rise in food prices will continue to have a worrying impact on India’s most vulnerable, putting pressure on their savings.

Other items in the basket that have pushed retail inflation include fuel, which recorded an inflation rate of 11.6 per cent in May 2021, transport and communications, which was recorded at 12.6 per cent, and edible oil at 30.8 per cent. In October 2020, the CPI hit 7.6 per cent, the highest it has been in 6.5 years due to rising gold prices, healthcare costs, and people’s increased preference for using private transportation due to Covid-19. The government’s policy of increasing taxes on fuels, which causes cost-push inflation in an economy, was a major factor behind the rise in the CPI. Additionally, the global rise in prices of edible oils is another major risk to the rising inflation baskets.

During the second wave of the pandemic, markets overall saw fewer supply chain disruptions, but the global rise in prices, along with an increase in prices of crude oil, gold, and edible oil, all of which are spilling over into consumer inflation, along with rising prices of food items are painting a very worrisome picture of the Indian economy. The surge in prices is not expected to stabilise anytime soon, as the RBI estimates CPI inflation at 5.1 per cent for the 2021-2022 financial year. It has predicted an inflation rate of 5.4 per cent for the second quarter, 4.7 per cent in the third quarter, and 5.3 per cent in the fourth quarter.

Edible oils have recorded some of the highest inflation rates in the last couple of months.

Photograph by Biswarup Ganguly | creativecommons.org

Rising prices of Petrol & Diesel directly fuels inflation for all other items by increasing the transportation costs.

WHY IS THE WPI RISING?

The Wholesale Price Index (WPI), measures the changes in the prices of goods sold and traded in bulk by wholesale businesses to other businesses. Before 2014, the WPI was given more weightage as an indicator of inflation by the RBI. However, in 2014, CPI was adopted as the official indicator to measure the rate of inflation in the country. The WPI rose to a record high of 12.94 per cent in May 2021 – this was the highest wholesale inflation rate since December 1998. Three major components that can be attributed to this record-high increase in the WPI are fuel, power, and manufacturing. Fuel and power have registered an increase of 37.6 per cent, followed by manufacturing at 10.8 per cent and primary article at 9.6 per cent. Manufactured products have a weightage of around 65 per cent in the WPI. This, compounded with a steep increase in prices of metals, rubber, chemicals, and textiles, has prompted a further increase in the WPI.

Economists suggest that globally rising prices of crude oil and essential commodities worldwide will continue to push WPI inflation further in India in the next few months. High taxes on retail fuel cause a spike in inflation and the transportation cost of the manufactured products has also increased, thus adding to wholesale inflation.

MONETARY VS FISCAL POLICY: WHAT IS THE SOLUTION?

Wars disrupt supply of goods and services as stock is diverted to meet the needs at the frontline.
Photograph by Wikimedia Commons
Droughts induced by overuse of underground resources or poor rainfall agricultural yield and prices of food items.
Photograph by Wikimedia Commons

The RBI faced many competing objectives on inflation, bond yields, and the rupee, in 2020 while struggling to encourage economic development when the economy was devastated by the COVID-19 pandemic. However, since the second wave of the pandemic hit the country in March 2021, the job of the RBI became even more difficult, as it continues to struggle to maintain its objectives.

Governments often use fiscal policies, including changing tax and spending levels to influence the level of aggregate demand in an economy, thereby reducing the inflationary pressure on an economy. The 2021-22 Union Budget allotted INR 34.83 lakh crore for expenditure, which is roughly 15.6 per cent of GDP. In the recent past, no union budget has exceeded the limit of 13.5 per cent. Capital expenditure in the economy also received a huge boost to INR 5.5 crore. Additionally, the government reduced import duties on edible oil and masoor dal. However, in December 2020, the Ministry of Finance said that the government could not spend more because it was concerned about a higher fiscal deficit, and cut spending by about 22 per cent in the September quarter of the last financial year.

One of the major reasons an increase in retail inflation, especially food inflation is worrying for any economy, is that it often coincides with a contraction of demand in an economy. Rising food prices, when not compensated with an increase in food support from the government, force low-income households to dip into their savings, which are already falling due to the economic pressure of the pandemic. This is likely to cause a decline in overall household savings, jeopardizing any chances of recovery for a struggling economy. Economists have criticized the government for not increasing spending to compensate for the losses of households with low-income and those below the poverty line. While food inflation continued to be high even months after the COVID-19 lockdown, the government did not continue its free grain distribution scheme under the Pradhan Mantri Gareeb Kalyan Anna Yojana beyond November 2020.

India is certainly not the only country facing inflationary pressures due to the COVID-19 pandemic. Brazil, which has been facing historically high inflation rates, has increased interest rates. The United States of America has also increased its interest rates to curb inflation which is at its highest levels since August 2008, when the recession hit. China is also seeing inflationary pressures in its economy due to an increase in prices of raw materials, and the Chinese government has decided to release its stockpiles of metals to reduce the pressure.

During its monetary policy meeting earlier in June, all eyes were on the RBI, with hopes that they would intervene to reduce the price pressure on businesses and individuals alike. However, during this meeting, the RBI announced that it would keep interest rates unchanged at current low levels, in an attempt to encourage growth in the economy. Economists state that the RBI needs to carefully forge a balance between fiscal and monetary policies in order to facilitate economic recovery in the country. Given the conflicting and competing objectives of the economy, this is undoubtedly easier said than done.

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INDIAN HOUSEHOLDS CRUMBLING UNDER RETAIL INFLATION

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Managing inflation has been a herculean task globally during the ongoing Covid-19 pandemic. Global value chains are more connected than ever, and the change in prices of goods and services in one country has an impact in several parts of the world. Countries employ various tools ranging from monetary policy to fiscal spending to rein in inflation, which has a direct impact on the lives, livelihoods, and living standards of their populations. India was reeling under rising inflation even before the pandemic began, with food and fuel inflation being the major drivers of price rise. Pandemic-induced lockdowns have further impacted economic activity negatively. Lower economic activity coupled with supply chain bottlenecks, domestically and internationally, have restricted the government’s ability to deal with inflation as physical and financial resources are diverted towards managing the Covid-19 situation. With this article, we hope to shed light on the constant rise in inflation during the various waves of the Covid-19 pandemic in India, the impact this has on individuals and businesses, as well as the measures being taken by the Government of India and the Reserve Bank of India (RBI) to control the same.

Onions have been at the receiving end of rising inflation for years now.

Photograph by Wikimedia Commons

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COVID-19 VACCINATION: WHY GENDER GAP IS GROWING

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The Covid-19 vaccination drive in India, referred to as the “largest vaccination drive in the world” by the Indian government, kickstarted on 16 January 2021. The entire country rejoiced as Manish Kumar, a 34-year-old sanitation worker received the first jab of Bharat Biotech’s Covaxin at All India Institute of Medical Sciences (AIIMS) in New Delhi. Since then, India has administered a total of 25.53 crore doses (including first and second doses) of Covid-19 vaccines. Out of the 25.53 crore doses that have been administered, roughly 11.21 crore doses have been administered to men, while 9.56 crore doses have been administered to women, and roughly 27,970 on others (as of 14 June 2021). Over 2 crore more men than women have been vaccinated during the first five months of the vaccination programme, which projects a growing gender gap. As per an analysis of National Family Health Survey data, historically, full immunization is much lower among female children, and there has been a significant gender disparity in the administration of BCG, DPT, polio, and measles vaccines. Covid-19 vaccination trends seem to follow the pattern.

For every 1,000 men receiving the Covid-19 vaccination (first or second dose), roughly only 852 women are getting vaccinated, which is much lower than India’s already skewed sex ratio of 900 (Niti Aayog, 2015). Some of the worst-performing states include Delhi where the gender gap as of 14 June is 722 females vaccinated per 1,000 males while the sex ratio is 821 females per 1,000 males ; Jammu and Kashmir, where the vaccination gender gap is 712 as compared to the sex ratio of 892; Uttar Pradesh where the vaccination gender gap is 741 as compared to the sex ratio of 898. Other poorly-performing states include Punjab, where the vaccination gender gap is 770 as compared to the sex ratio of 876, and Nagaland where the vaccination gender gap is 755 as compared to the sex ratio of 900.

On the other hand, the least gender gap in Covid-19 vaccination has been recorded in Kerala where the vaccination gender gap is 1075 females as compared to the sex ratio of 1058, Andhra Pradesh with 1071 females vaccinated for a sex ratio of 978, Chattisgarh where 1045 females are vaccinated for a sex ratio of 989, and Himachal Pradesh where the vaccination gender gap is 979 as compared to the sex ratio of 968.

While one aspect of the growing gender gap in Covid-19 vaccination is the skewed sex ratio in India, in that, females comprise roughly 48% of the population and males roughly 52%, the gender gap in vaccination is much higher than this disparity. The inequality between males and females in India in the areas of access to healthcare, technology, and literacy rates has a multiplier effect on the vaccination gender gap, which has widened in the last five months, since the start of the vaccination programme in the country. In addition to this, social stigma and other cultural divides between males and females, which are even more prevalent in rural areas, also have an impact on this.

DECODING THE VACCINE GAP

The vaccine gender gap cannot be viewed through an isolated lens. The overall inequitable access to healthcare coupled with systemic problems such as lack of facilities to promote women’s health and lack of education play a role in this widening gender gap. Hesitancy to opt for the Covid-19 vaccine, compounded by the digital divide of access to vaccines, are perhaps two of the most important factors playing a role in increasing the gender gap. As per the National Family Health Survey, conducted in December 2020, on an average, less than three out of 10 women in rural areas and four out of 10 women in urban areas in India have ever used the Internet. Currently, the only way to register for the Covid-19 vaccination programme is through the Government of India’s online portal, COWIN. Due to digital illiteracy, most women in rural and in fact low-income urban households cannot register themselves for the vaccination, creating a huge technology gap. In addition to this, illiteracy has been attributed as one of the main reasons for the misconceptions around the Covid-19 vaccines. On top of this, the female literacy rate in India (70.3%) is significantly lower than the male literacy rate (84.7%), having an even bigger multiplier effect on their access to knowledge about healthcare. Misinformation is another key factor in the low vaccination turnout, and this impacts women more. Several misconceptions, such as getting vaccinated during menstruation leads to blood clots, the effect of vaccines on fertility, and the vaccine being harmful to pregnant and lactating women, are all a result of miscommunication and lack of proper knowledge about healthcare through verified and appropriate channels, which adversely affect women’s willingness to get vaccinated.

Systemic gender inequality in access to healthcare also contributes to the gender gap of vaccination. According to a research study conducted by Harvard University, only 37% of women in India have access to healthcare, as compared to 67% of men. Gender continues to be a barrier across rural and low-income Indian households. Cultural practices, socio-economic status, cost expenditure on health, and perception of illness all have a consequential impact on gender discrimination in access to healthcare services in India.

Additionally, cultural divides and gender norms add to a growing gender divide. In most rural households in India, women have less autonomy to make decisions about their healthcare, their bodies, and their lives, as compared to their male counterparts. Add to this the fact that overall in low income and rural households, there is reduced spending on women’s nutrition and healthcare services, and preference is always given to males in the household for spending money on healthcare services. As per the fourth National Family Health Survey, only 40% of women are allowed to go out alone, including to a health facility. Most females in Indian households are dependent on the men in their families. All these factors affect and limit their access to adequate healthcare.

GENDERED POLICY MAKING: A SOLUTION TO OVERCOME THE GAP

Photograph by Creative CommonsPhotograph by Creative CommonsPhotograph by Creative Commons

Women face plenty of roadblocks to receiving healthcare and consequently, their protection against Covid-19 is affected. So what is the solution? The most essential need is to adopt an approach that takes gender disparity into account while making policies surrounding healthcare, especially for programmes such as the Covid-19 vaccination drive, to help women overcome recurring and consistent barriers. The World Health Organization (WHO) has called for countries to address gender-related barriers in the planning and roll-out of vaccine distribution schemes to enable vaccinations to reach everyone, especially those who are marginalised. It also adds that employing women vaccinators is key to closing the gender gap in access to Covid-19 vaccination. In India, where the majority of paramedical staff, ASHA workers, and anganwadi workers are female, incentives, training programmes, and educational drives need to be undertaken to motivate women at the grassroots to opt for the Covid-19 vaccines. Similarly, at the rural level, female panchayat leaders and heads should be educated to motivate and help women from their communities get vaccinated. Having women-only vaccination centres, or having reserved time slots at vaccination sites only for women, and moving away from only digital registration for vaccination slots, will also prompt more women to get vaccinated.

State and central governments, as well as health departments, need to invest in social campaigns to address misconceptions about vaccinations, especially those surrounding the impact of the vaccine on pregnant, lactating, and menstruating women. Because of the profound inequality in almost every sphere, including access to education, healthcare, technology, cultural, and social stigmas, any crisis has a greater impact on females in India. Timely vaccination is the only solution to protect populations from the ravaging impact of the Covid-19 pandemic. If steps are not taken to close the gender gap in vaccination programmes, the long-lasting impacts of the pandemic on Indian gender statistics (including literacy, health, income, and employment,) which are already among the worst in the developing world, could be catastrophic.

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WHY ARE PROTESTS BREWING IN THE ISLANDS OF LAKSHADWEEP?

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Over the last few weeks, protests by Opposition parties have been developing across several states, including on social media, against the proposed legislative changes by the administrator of the Union Territory (UT) of Lakshadweep, Praful Khoda Patel. Lakshadweep is an archipelago of 36 islands located in the Arabian Sea, about 220-440 kilometres from Kerala. The islands constitute a single Indian district, which is also a Union Territory. This means that it is governed by the President of India through an appointed administrator under Article 239 of the Indian constitution. Any regulations introduced on the islands require ratification from both the Union Home Ministry and the Union Cabinet. As an indirect Administrating Authority, the Ministry of Home Affairs (MHA) also has the power to veto any plans or regulations introduced.

Praful Patel, Administrator of Lakshadweep.

Photograph from Twitter

Development projects on the islands have been opposed by locals. Kavaratti, Lakshadweep.

Photograph from Twitter Photograph by Wikimedia Commons

Recently, many states, most notably the Kerala Assembly, have passed a resolution seeking withdrawal of the new reforms and the removal of Praful Patel as administrator. The Kerala High Court also instructed the administration to release all those who were detained by the administration in connection with the protests against the proposed regulations, on execution of their personal bonds. We delve deeper to find out what these proposed laws really are, their intention, and why people are protesting against them and Praful Patel.

WHO IS PRAFUL PATEL?

Praful Khoda Patel is the current administrator of Lakshadweep and was appointed to the role in December 2020. Traditionally, such positions are held by Indian Administrative Service (IAS) officers. However, Patel is one of the few politically appointed administrators in the history of the union territories. Patel started his political career in Gujarat, where he won from Himatnagar constituency during the 2007 Gujarat state assembly elections. While Prime Minister Narendra Modi was the Chief Minister of the state, Patel was appointed as the MoS Home Minister of Guajarat in August 2010 and is known to be a close aide to our current Prime Minister. After the election of Narendra Modi as Prime Minister in 2014, he appointed Patel as the Administrator of Daman and Diu in 2016, and shortly after as the Administrator of Dadra and Nagar Haveli.

During his administrative career, Patel has been entangled in several controversies due to his policies. During the 2019 Lok Sabha elections, the Election Commission of India (ECI) issued a notice to Patel stating that his actions violated provisions under the Representation of the People Act of 1951. A few weeks prior to the election, the ECI reprimanded Patel for issuing “coercive” requests to Kannan Gopinathan, the collector for Dadra and Nagar Haveli, who was also responsible for overseeing the election results. Election Commission officials state that Praful Patel called election officers to issue direct instructions to them.

Patel was also caught up in a controversy about clearing indigenous lands in Daman and Diu in 2019. Adivasi fishing communities, who have lived in Daman and Diu for generations, have claimed valuable seafront land along the 700 metre stretch from Moti Daman Lighthouse to Jampore beach. In December 2018, local residents received official-looking documents purportedly following the orders of Patel ordering the confiscation of the land and demolition of homes along the coast to make way for the development of the coastline. In November 2019, Rakesh Minhas oversaw the bulldozing of around 90 homes that were allegedly illegally constructed. Following this, protests erupted in Daman and Diu, leading to the imposition of Section 144 banning peaceful assembly and the arrest and detention of 80 protesters. As of March 2021, the site is The Fern Seaside Luxurious Tent Resort offering tourist accommodation owned by the multinational conglomerate, CG Corp Global.

In addition to this, following the appointment of Patel as the Administrator of Lakshadweep in December 2020, his administration ended the mandatory Covid-19 quarantine rule for those who were entering the territory. Due to this, the islands, which had zero registered cases of Covid-19 till 18 January 2021, had the first batch of 30 cases reported on 20 January. Following this, case overload and the quick spread of the virus led to the announcement of a complete lockdown by the administrators. As of 2 June, there are 8,335 registered cases of Covid-19 on the islands, with an average increase of 165 cases per day.

WHAT ARE THE PROPOSED LAWS AND WHY ARE PEOPLE PROTESTING AGAINST THEM?

Three major laws have been released by the administration of Lakshadweep during the ongoing lockdown – the Prevention of Anti-Social Activities Regulation (PASA), the Animal Preservation Regulation, and the Panchayat Regulation. All three laws are currently being scrutinized by the union home ministry. Another draft law in contemplation is the Lakshadweep Development Authority Regulation 2021, which allows the administrator to acquire any land required for a public purpose.

LAKSHADWEEP ANIMAL PRESERVATION REGULATION, 2021

The Lakshadweep Animal Preservation Regulation, 2021 bans the transport of cattle for slaughter, selling or buying of beef or beef products, granting law enforcement officials powers to enter and inspect premises without a warrant. Those found guilty of slaughtering a cow, calf, bull, or bullock without a certificate can face imprisonment for life not less than 10 years with a maximum fine of INR 5 lakh. The offences are cognisable and non-bailable. The draft law is very similar to laws in place in many states across the country, banning the slaughter, sale, and purchase of beef.

Opposition parties claim that the BJP’s communal politics is behind the decision of the administration to introduce this law. The beef ban and removal of meat from students’ meals are seen by many as communal moves which will hurt Lakshadweep’s predominantly Muslim population.

LAKSHADWEEP PANCHAYAT REGULATION, 2021

The islands of Lakshadweep are mostly agrarian rural areas, and operate in a system of Gram Panchayats or Village (Dweep) Panchayats to serve as local representatives. As part of the new regulations, 50% of the seats in gram panchayats would be reserved for women and those with more than two children would not be allowed to contest panchayat elections (with some exceptions). As per officials, the reason for the two-child regulation is that Lakshadweep’s population density is much higher than the national average, and the move will help develop resources and infrastructure within the “limited landmass” of the islands. Other states, including Rajasthan, Telangana, Andhra Pradesh, Gujarat, Maharashtra, Uttarakhand, and Karnataka have similar laws as well. Several policy experts have pointed out that the policy leads to unsafe and illegal abortions and could also distort the sex ratio in the UT.

Additionally, many also say that the Panchayat Regulation will blatantly reduce the powers of local self-government organizations. Powers of the panchayats in areas such as education, health, fisheries, and animal husbandry have been curtailed and granted to the respective directorates which are under the direct authority of the administrator. This will affect the administrative and financial powers of the panchayats and gram sabhas.

LAKSHADWEEP PREVENTION OF ANTI-SOCIAL ACTIVITIES REGULATION, 2021

Infamously known as the “Goonda Act” in some other states, the Lakshadweep Prevention of Anti-Social Activities Regulation, 2021 allows authorities to detain a person for up to one year to prevent them from “acting in any manner prejudicial to the maintenance of public order”. The act allows for the detention of anyone engaging in or suspected to be engaging in anti-social activities from six months to a year without legal representation. Such laws have been enacted by many state governments, including Tamil Nadu, Uttar Pradesh, Karnataka, and Kerala. Administration officials have said that PASA was necessary to crack down on the smuggling of weapons and narcotics, which is allegedly on the rise in the archipelago.

However, opposition parties have questioned the need to enact the PASA on the islands, given that the UT has one of the lowest crime rates in the country. As per National Crime Records Bureau data, only 186 cases of crime were registered on the islands in 2019 and 89 in 2020. Locals have also expressed fear that the preventive detention law is to prevent any protests on the islands against the administration’s decisions.

LAKSHADWEEP DEVELOPMENT AUTHORITY REGULATION, 2021

The regulation would allow the government to recognize any area which it thinks has a “bad layout or obsolete development” and develop it. It would also allow authorities to relocate people who currently live on the recognised land regardless of the landowner’s will and failure to comply with the same would lead to heavy penalization. As per authorities, the regulation has been designed to speed up the development of the islands and help boost tourism. Tourist infrastructure on the island requires development and there is high unemployment.

However, local representatives state that the regulation would result in indigenous communities losing ownership of their land. The law would put the power in hands of the administration to take land with or without people’s consent and it would be the administration’s prerogative whether or not compensation needs to be paid. Additionally, many marine experts have also said that such development, if not done carefully, would also cause the “delicate ecology of the island to unravel.”

Despite an ongoing lockdown in most states across the country, protests against the proposed legislation have been growing on social media. Many see the proposed laws as an attempt to centralise power into the hands of Patel and as a threat to the democratic setup of the UT and those living there. Local representatives on the islands have also highlighted that no public consultations were held before the reforms were brought by the Administrator. Only the draft Lakshadweep PASA 2021 was uploaded by the island administration in January 2021 inviting comments and suggestions from the public. The decision to introduce major legislative changes during a lockdown, whereby any discussion or debates cannot be held is being criticized by many. Critics have said the development agenda is being used as a cover to further the vested interests of political parties. While legislation intended to improve security, generate employment and bring about development on the islands are in the best interest of inhabitants, there is also a need to ensure the local population is consulted and protected during the process.

Contributing reports by Damini Mehta, Junior Research Associate at Polstrat and Anushka Dwivedi, Raunaq Sharma, Sehal Jain, Interns at Polstrat.

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CANCELLATIONS AND DELAYS: NO RESPITE FROM PANDEMIC WOES

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WHAT IS HAPPENING TO THE TRAVEL AND TOURISM SECTOR IN INDIA?

Ongoing consecutive “waves” of the Covid-19 pandemic and the subsequent lockdowns in countries across the world have had an impact on almost every global industry. While no industry, business (big or small), and/or individual has completely escaped the financial impact of the pandemic, some industries have been impacted much more than others. Undoubtedly, one of the most widely affected industries worldwide has been the tourism industry. Tourism is the third-largest export sector in the world, accounting for 7% of global trade (2019). For some countries, tourism accounts for over 20% of overall GDP and is the source of direct and indirect employment for millions.

In November 2020, the World Travel & Tourism Council (WTTC) said that by the end of 2020, 174 million people worldwide could lose their jobs if the restrictions on travel continued. Actual figures revealed that 62 million jobs were lost in 2020 and figures published by the World Tourism Organization (UNWTO) revealed that roughly $1.3 trillion was lost in export revenue in 2020. Tourism is an extremely labour-intensive industry and provides scope of employment for low-skilled workers. While some countries in the world have begun to lift restrictions on foreign and domestic tourist arrivals, India is experiencing a deadly second wave of the Covid-19 crisis and has closed its doors to domestic and international tourists. The travel and tourism industry in the country, accounting for roughly 9% of its GDP (WTTC, 2018), has experienced a sharp decline as tourist footfalls have taken a hit across the country. Most states in India continue to be under lockdown, and even as curbs on movements begin to be lifted, the tourism industry is unlikely to witness an immediate recovery.

Before the Covid-19 pandemic hit India, the tourism and hospitality industry in the country was operating at an all-time high. Travel and tourism is the largest service industry in India and was estimated to be worth $247.37 billion in 2018 as per WTTC data. The industry was the largest Foreign Exchange Earner, with earnings of $29.962 billion in 2019 (y-o-y growth rate of 4.8%). For the same year, the sector contributed nearly $194 billion, around 6.8%, of GDP. In addition to this, the tourism industry accounts for 8% of employment in the country, employing around 39 million people (2018-19). In fact, the government made the industry a major pillar in its “Make in India” program due to its potential for creating jobs. The threat of job losses persists as many jobs are currently supported by government retention schemes and reduced hours, which could be lost without the full recovery of travel and tourism.

With borders closed to foreign and in some cases, even domestic tourists, and the complete shutting down of public places, including hotels and restaurants, the industry fueling the Indian economy in so many ways came to a crashing halt. During the budget session this year, the Minister of State for Tourism said that the total number of tourists arriving in India went from 77.5 lakh during April-December 2019 to 2.13 lakh for the same period in 2020. Foreign tourist arrivals during April-December 2020 registered a decline of 97% as compared to the same period in 2019. Apart from direct revenue generated by foreign tourists and the complete halt of the hospitality sector, domestic and international medical tourism, the MICE (meetings, incentives, conferencing, exhibitions) sector, and MSME output in the tourism sector have all been adversely affected.

In August 2020, Tourism Secretary Yogendra Tripathi said that roughly 2 to 5.5 crore people employed in the tourism sector, directly or indirectly, have lost their jobs in 2020, while the revenue loss in the sector was estimated at INR 1.58 lakh crore. This figure is likely to be much higher in 2021, after the impact of the second wave. The rollout of vaccines in January this year had revived the possibility of increasing domestic tourism, giving those in the industry hopes of a “normal” summer, which is considered to be the peak time of operations for the industry. However, the ravaging impact of the second wave, which swept across the country at a faster speed than the first, took away any chances of a revival. For many in the domestic tourism and hospitality industry, who had hoped to recover losses in 2021 as restrictions were being relaxed, the impact of the second wave and losses could mean final blows to their businesses.

Covid-19 has changed the way people, businesses and countries are approaching tourism with the impact on the industry across the world being unprecedented.

Photograph by Wikimedia Commons

TOURISM-RELIANT STATES: COPING MECHANISMS

As per data provided by the Ministry of Tourism, the top tourist destinations in India are Tamil Nadu, Kerala, Goa, Uttar Pradesh, Rajasthan, Bihar, and West Bengal, with tourism accounting for as much as 20% of the GDP in some of these states. The tourism industry in Goa, which contributes around 17% of the state’s GDP suffered losses of around Rs 2,000-7,200 crores and job losses of around 35-58% during the first wave of the pandemic. The local economy of the state, encompassing small hotels, guest houses, shacks, restaurant owners and employees, taxi drivers, independent guides, and freelancers, directly employs 35% of the state’s population.

Similarly, in Kerala, the tourism industry contributes to around 10% of the state’s GDP. The sector, which had only just started recovering from the impact of the 2018 floods and the Nipah virus scare, collapsed completely due to the impact of the Covid-19 lockdowns and travel restrictions. Estimated losses from domestic tourism are around Rs 19,697 crore, and approximately Rs 5,274 crore from loss of foreign tourism. Bihar, which is home to the UNESCO world heritage sites of the Mahabodhi temple in Bodh Gaya and ruins of the ancient Nalanda University, witnessed a major decline in the number of foreign as well as domestic tourists. The state of Rajasthan, which is also heavily reliant on tourism, witnessed a 60% drop in the arrival of foreign tourists and 70% drop in domestic tourists, resulting in a deep impact on the domestic economy.

WHAT IS THE GOVERNMENT DOING TO HELP?

Photograph by Wikimedia Commons
Photograph by Wikimedia Commons

In April 2020, the Ministry of Tourism constituted a National Tourism Taskforce, to be headed by the Minister of State for Tourism to meet the challenges posed by Covid-19. The task force consisted of state tourism ministers, joint secretary-level officers as well as heads of tourism and hospitality associations.

Tourism-reliant states have also announced various measures to help their own local economies bear the brunt of the Covid-19 pandemic. In Jammu and Kashmir, an Rs 1,350 crore economic package was announced to help various sectors impacted by the pandemic. This included a financial assistance package for shikara owners, tourist guides, pony walas, and those who rent palanquins to tourists.

The Rajasthan government also announced an investment of Rs 500 crore to the Tourism Development Fund along with relief under the Rajasthan Investment Promotion Scheme 2019 for one extra year to establishments in the tourism, multiplex, and hotel sectors.

The Delhi government has allocated Rs 521 crore in the 2021-22 budget for the implementation of schemes, programmes, and projects in the tourism, ar, and culture sectors and introduced ‘Delhi Heritage Promotion’ and ‘Delhi Tourism Circuit’ to help revive the sector post-pandemic.

Despite these measures, it is unclear whether the tourism sector will be able to survive the impact of the second wave of Covid-19. Travel agents, hotel and restaurant owners, employees, local artisans, travel guides, among others, were all relying on a glimmer of hope for the tourism sector after the first wave.

The crushing impact of the second wave and the closing down of borders has quashed all hopes of a faster and earlier recovery.

As India continues to deal with the impact of the second wave, the tourism industry, unlike other industries which would begin recovery immediately after restrictions are lifted, is unlikely to bounce back as fast as hoped.

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Statistically Speaking

WILL INDIA’S TOURISM INDUSTRY SURVIVE SECOND COVID WAVE?

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During the Covid-19 pandemic, most industries were forced to adapt to new ways of doing business, as employees began to work from home and customers were approached through online platforms. While some industries tackled this shift quite easily, some others, like hospitality and agriculture, could not make the transition. Service-driven tourism and hospitality is an industry that has next to no provision to be able to continue economic activity remotely. Neither employees nor customers can access these services remotely. One way that this is reflected is by a drop in the number of foreign tourists arriving in India which went from 12 lakh in December 2019 to 470 in April 2020. Even after India and other countries began slowly opening up their borders after the decline of the first wave, only 80,000 foreign tourists visited India in December 2020. While this reflects only one part of the rampage the pandemic has inflicted on the sector, which is heavily dependent on the movement of people across national and international borders, the other part, the domestic tourism sector, has a similar story to tell.

The pandemic has affected lakhs of families as the death count in the country has reached the third highest in the world at 3.29 lakh. The financial impact of the pandemic has affected many more as the economy recorded a negative growth of 7.3% in 2020-21 (provisional estimates of the Central Statistics Office) as the tourism, communications, and transport industries took the biggest hit recording a dip of 18.2% in 2020-21. The microeconomic impact of this decline has manifested in the form of falling demand, consequently, a decline in revenue, and finally, reduction in salaries and increased job cuts. Despite relief measures announced by the central and state governments, it is unclear whether the tourism sector across states – which is one of the biggest sources of employment for millions – will be able to fully recover from the impact of the second wave of the Covid-19 pandemic.

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