Margin: The Journal of Applied Economic Research, Volume 17, Issue 1-2, Page 113-123, February–May 2023.
The COVID-19 pandemic had a severe impact on the tourism industry across the world. Be it aviation or hospitality, transportation, tour operators or eateries, every activity related to tourism was adversely affected by the pandemic in an unprecedented manner. India saw the first severe impact during the first quarter of 2020–2021 when the tourism industry was severely affected, in terms of loss in tourism demand due to a significant fall in tourist arrivals. The industry saw gradual signs of recovery post-October 2020 but was hit again by the second wave during April–June 2021 and then by the third wave during November 2021–January 2022. Given the contribution that tourism makes to the entire economy in terms of income and employment generation, it is important to do a systemic estimation of the losses caused by the pandemic so that resilient policies are put in place to address the challenges at all levels and put the tourism sector back on the path it was traversing before the pandemic. This article presents the estimates of economic losses resulting from the changes experienced during the most critical period of the pandemic, that is, the first quarter of 2020–2021, which witnessed a complete lockdown, and the subsequent two quarters, wherein the sector started showing gradual recovery following various relaxations in economic activities and travel movements. The estimates are based on the methodology that draws from the framework laid out in the Tourism Satellite Account of India, which, in turn, is based on the methodological framework recommended by the United Nations World Tourism Organization.JEL Codes: L830, Z320, F620
Category Archives: The Journal of Applied Economic Research
Urban Exclusion: Rethinking Social Protection in the Wake of the Pandemic in India
Margin: The Journal of Applied Economic Research, Volume 17, Issue 1-2, Page 59-93, February–May 2023.
The COVID-19 pandemic, and the consequent nationwide lockdown in India that began on 25 March 2020, caused a major disruption in the labour market, leading to the widespread loss of livelihoods and food insecurity. The findings from a telephonic survey of a representative sample of more than 3,000 households in the National Capital Region also reveal a dramatic loss in earning capacity. The place of residence and occupation mediated the impact of the lockdown, with greater vulnerabilities witnessed amongst those engaged in informal employment, especially in urban areas. The government rolled out a series of welfare measures in response to the widespread economic distress, with the provision of free foodgrains and cash transfers aimed at rehabilitating those who were the most affected. While the use of prior social registries enabled quick disbursement, our analysis shows that few households received both foodgrains and cash transfers, particularly in urban areas. Urban residents were also eight percentage points less likely to receive cash transfers than their rural counterparts.JEL Codes: I38, J21, O17
The COVID-19 pandemic, and the consequent nationwide lockdown in India that began on 25 March 2020, caused a major disruption in the labour market, leading to the widespread loss of livelihoods and food insecurity. The findings from a telephonic survey of a representative sample of more than 3,000 households in the National Capital Region also reveal a dramatic loss in earning capacity. The place of residence and occupation mediated the impact of the lockdown, with greater vulnerabilities witnessed amongst those engaged in informal employment, especially in urban areas. The government rolled out a series of welfare measures in response to the widespread economic distress, with the provision of free foodgrains and cash transfers aimed at rehabilitating those who were the most affected. While the use of prior social registries enabled quick disbursement, our analysis shows that few households received both foodgrains and cash transfers, particularly in urban areas. Urban residents were also eight percentage points less likely to receive cash transfers than their rural counterparts.JEL Codes: I38, J21, O17
The Economic Implications of Air Pollution: A Case of Two Cities
Margin: The Journal of Applied Economic Research, Volume 17, Issue 1-2, Page 94-112, February–May 2023.
Many cities in urban India, particularly the metros, are major hotspots of air pollution with a PM2.5 concentration level ranging above the permissible limits defined by the World Health Organisation for most of the year. Since the transport sector is a main source of air pollution in urban India, the Government of India adopted BS-VI emission standards in 2016 for all major on-road vehicle categories. The rollout of clean fuel (BS-VI) in India began in the capital city of Delhi, one of the most polluted cities of India. In this context, the primary objective of the article is to analyse the economic cost of air pollution in Delhi/Haryana through a primary survey of occupational groups exposed to ambient air pollution. The secondary objective is to provide suggestive evidences of the implications of the roll-out of cleaner fuel in Delhi while the same was not yet implemented in the neighbouring city of Narnaul in Haryana. We measure the economic cost of air pollution using three approaches, namely, the cost of illness approach, the productivity loss approach and also by undertaking a contingent valuation (CV) exercise. Through a first-of-its-kind CV survey administered in India, the welfare analysis uses the Indian estimates of the value of life years (VOLYs) to arrive at the welfare loss figures. We found that the economic costs in terms of health expenditure and productivity loss were ₹4.08 billion and ₹31.28 billion, respectively, for New Delhi, which remained higher than Narnaul. Although the cost of pollution decreased during the second phase of the survey towards the end of 2019, we argue that a longer time period analysis is needed to understand the true impact of introduction of the cleaner BS-VI fuel in reducing the impact of air pollution within the city. However, if one considers the value of LYs for Narnaul as a proxy for Haryana, we find that the welfare loss is higher in Haryana than in New Delhi.JEL Codes: I18, Q51, Q52, Q53, Q58
Many cities in urban India, particularly the metros, are major hotspots of air pollution with a PM2.5 concentration level ranging above the permissible limits defined by the World Health Organisation for most of the year. Since the transport sector is a main source of air pollution in urban India, the Government of India adopted BS-VI emission standards in 2016 for all major on-road vehicle categories. The rollout of clean fuel (BS-VI) in India began in the capital city of Delhi, one of the most polluted cities of India. In this context, the primary objective of the article is to analyse the economic cost of air pollution in Delhi/Haryana through a primary survey of occupational groups exposed to ambient air pollution. The secondary objective is to provide suggestive evidences of the implications of the roll-out of cleaner fuel in Delhi while the same was not yet implemented in the neighbouring city of Narnaul in Haryana. We measure the economic cost of air pollution using three approaches, namely, the cost of illness approach, the productivity loss approach and also by undertaking a contingent valuation (CV) exercise. Through a first-of-its-kind CV survey administered in India, the welfare analysis uses the Indian estimates of the value of life years (VOLYs) to arrive at the welfare loss figures. We found that the economic costs in terms of health expenditure and productivity loss were ₹4.08 billion and ₹31.28 billion, respectively, for New Delhi, which remained higher than Narnaul. Although the cost of pollution decreased during the second phase of the survey towards the end of 2019, we argue that a longer time period analysis is needed to understand the true impact of introduction of the cleaner BS-VI fuel in reducing the impact of air pollution within the city. However, if one considers the value of LYs for Narnaul as a proxy for Haryana, we find that the welfare loss is higher in Haryana than in New Delhi.JEL Codes: I18, Q51, Q52, Q53, Q58
Chronic Absenteeism and Its Impact on the Learning Outcomes of Primary Grade Students in India
Margin: The Journal of Applied Economic Research, Volume 17, Issue 1-2, Page 124-162, February–May 2023.
This article addresses one of the most critical yet overlooked problems of the excessive absence of students in primary grades in India. Considering the intuitive link between students’ attendance and achievements, this article empirically investigates the incidences and causes of chronic absenteeism while examining the variations in the attainment of foundational skills of primary students. Using data from the India Human Development Survey, round II, the authors find a continuous decline in the attainment of foundational skills among students as the absenteeism rate increases from ‘normal’ to ‘chronic’, clearly indicating that attendance works! Further, the logistic regression model shows that poor health conditions of a child, larger school distance, extra school working hours, teaching factors and harsh punishments are among the major contributing factors leading to chronic absence among students. Early attention and strict policy interventions are required due to their direct implications on the cognitive growth of young minds and the quality and productivity of the overall school education.JEL Codes: I21, I24, I28
This article addresses one of the most critical yet overlooked problems of the excessive absence of students in primary grades in India. Considering the intuitive link between students’ attendance and achievements, this article empirically investigates the incidences and causes of chronic absenteeism while examining the variations in the attainment of foundational skills of primary students. Using data from the India Human Development Survey, round II, the authors find a continuous decline in the attainment of foundational skills among students as the absenteeism rate increases from ‘normal’ to ‘chronic’, clearly indicating that attendance works! Further, the logistic regression model shows that poor health conditions of a child, larger school distance, extra school working hours, teaching factors and harsh punishments are among the major contributing factors leading to chronic absence among students. Early attention and strict policy interventions are required due to their direct implications on the cognitive growth of young minds and the quality and productivity of the overall school education.JEL Codes: I21, I24, I28
Priorities for the G20 Finance Track
Margin: The Journal of Applied Economic Research, Volume 17, Issue 1-2, Page 7-58, February–May 2023.
Emerging markets and developing economies are currently facing major challenges from global shocks, including a slowdown in global growth; food and energy price increases; decline in risk appetite of international investors; unsustainable debts in low-income countries; and ongoing climate risks. National policies have not sufficed to meet these challenges. Efforts at the national level must be complemented by changes in the global economic and financial architecture designed to make the world a safer place. In this article, we focus on the financial aspects of such reforms. The financial agenda as we see it has seven key elements: (i) reform of central bank swap lines, (ii) reform of IMF-contingent credit lines, (iii) SDR reallocation, (iv) reform of credit rating agencies, (v) creation of currency hedging instruments, (vi) inclusion of climate-resilient debt clauses in new debt instruments and (vii) steps to streamline the debt restructuring process. We detail this agenda and urge the G20 members to implement the recommended measures.JEL Codes: E44, E58, E61, F34, F36, F38
Emerging markets and developing economies are currently facing major challenges from global shocks, including a slowdown in global growth; food and energy price increases; decline in risk appetite of international investors; unsustainable debts in low-income countries; and ongoing climate risks. National policies have not sufficed to meet these challenges. Efforts at the national level must be complemented by changes in the global economic and financial architecture designed to make the world a safer place. In this article, we focus on the financial aspects of such reforms. The financial agenda as we see it has seven key elements: (i) reform of central bank swap lines, (ii) reform of IMF-contingent credit lines, (iii) SDR reallocation, (iv) reform of credit rating agencies, (v) creation of currency hedging instruments, (vi) inclusion of climate-resilient debt clauses in new debt instruments and (vii) steps to streamline the debt restructuring process. We detail this agenda and urge the G20 members to implement the recommended measures.JEL Codes: E44, E58, E61, F34, F36, F38
Economic Impact Analysis of a Mega Project on Petroleum Refinery: A Case Study of the Proposed Ratnagiri Refinery in Maharashtra
Margin: The Journal of Applied Economic Research, Volume 16, Issue 3-4, Page 254-277, August–November 2022.
An economic evaluation of mega projects is very important for taking into account important aspects connected with investment and operation costs, their possible overflows and the fulfilment of the time period intended for the project. But it is also needed for monitoring the impact of the projects on the overall economy and the regional surroundings. The main objective of the present article is the evaluation of a particular mega project, that is, Ratnagiri Refinery and Petrochemicals Limited, by examining the various aspects of economic evaluation using a new methodology for the estimation of the specific impact in the project evaluation.JEL Codes: C67, L71, L74
An economic evaluation of mega projects is very important for taking into account important aspects connected with investment and operation costs, their possible overflows and the fulfilment of the time period intended for the project. But it is also needed for monitoring the impact of the projects on the overall economy and the regional surroundings. The main objective of the present article is the evaluation of a particular mega project, that is, Ratnagiri Refinery and Petrochemicals Limited, by examining the various aspects of economic evaluation using a new methodology for the estimation of the specific impact in the project evaluation.JEL Codes: C67, L71, L74
What Role Does EPL Play in Wage Determination under Segmented Labour Markets? A State-level Analysis from India’s Formal Manufacturing Sector
Margin: The Journal of Applied Economic Research, Volume 16, Issue 3-4, Page 327-366, August–November 2022.
This study explores the role of employment protection legislation (EPL) in wage determination using a state-level panel dataset for India’s formal manufacturing sector. Unlike previous studies, we create a quantitative indicator of EPL using state-wise court judgements (on labour disputes), citing various sections of Chapters 5A and 5B of the Industrial Disputes Act, 1947, particularly those dealing with employment and wage-related legislations. Our findings suggest that pro-worker court judgements specifically on wage-related issues lead to an increase in the share of wages in industrial output. The findings are robust to alternative model specifications. However, we find that the share of wages responds negatively to an increase in pro-worker strictness in the overall EPL. We also analyse the consequences of labour market dualism, which is increasingly becoming a norm even in formal sectors. Using insights from labour market segmentation theory, we argue that a divergence in the regulation between regular and contract labour has a potential to undermine the success of active labour market policies in curbing the ill-effects of market segmentation.JEL Codes: J21, K31
This study explores the role of employment protection legislation (EPL) in wage determination using a state-level panel dataset for India’s formal manufacturing sector. Unlike previous studies, we create a quantitative indicator of EPL using state-wise court judgements (on labour disputes), citing various sections of Chapters 5A and 5B of the Industrial Disputes Act, 1947, particularly those dealing with employment and wage-related legislations. Our findings suggest that pro-worker court judgements specifically on wage-related issues lead to an increase in the share of wages in industrial output. The findings are robust to alternative model specifications. However, we find that the share of wages responds negatively to an increase in pro-worker strictness in the overall EPL. We also analyse the consequences of labour market dualism, which is increasingly becoming a norm even in formal sectors. Using insights from labour market segmentation theory, we argue that a divergence in the regulation between regular and contract labour has a potential to undermine the success of active labour market policies in curbing the ill-effects of market segmentation.JEL Codes: J21, K31
Public Debt and External Debt Sustainability among BRICS Countries
Margin: The Journal of Applied Economic Research, Volume 16, Issue 3-4, Page 231-253, August–November 2022.
This study analyses an important policy issue pertaining to the public debt and external debt of BRICS nations from 1993 to 2020 using the Bohn framework and a penalised-spline estimation method. It also checks the robustness of the results using the ADF and co-integration tests. The results indicate that as the primary surplus reacts positively and significantly to public debt in China and South Africa, the debt is sustainable in these nations. In Brazil, India and Russia, the debt is not sustainable. The external debt policy is sustainable only in China and not in other BRICS nations. These results suggest the need for immediate policy interventions in Brazil, India and Russia to achieve sustainable levels of public debt and external debt. We hope that these results will be useful to policymakers and other stakeholders to take appropriate strategies to improve the public debt and external debt position of BRICS nations and to make them sustainable.JEL Codes: H63, C23, D72, E62, H72
This study analyses an important policy issue pertaining to the public debt and external debt of BRICS nations from 1993 to 2020 using the Bohn framework and a penalised-spline estimation method. It also checks the robustness of the results using the ADF and co-integration tests. The results indicate that as the primary surplus reacts positively and significantly to public debt in China and South Africa, the debt is sustainable in these nations. In Brazil, India and Russia, the debt is not sustainable. The external debt policy is sustainable only in China and not in other BRICS nations. These results suggest the need for immediate policy interventions in Brazil, India and Russia to achieve sustainable levels of public debt and external debt. We hope that these results will be useful to policymakers and other stakeholders to take appropriate strategies to improve the public debt and external debt position of BRICS nations and to make them sustainable.JEL Codes: H63, C23, D72, E62, H72
Is the Willingness to Take Risks a Credential for Being a Model Farmer?
Margin: The Journal of Applied Economic Research, Volume 16, Issue 3-4, Page 433-452, August–November 2022.
Despite the significant role of model or demonstrator farmers in disseminating new technologies, systematic and empirical examination of the behavioural characteristics that distinguish demonstrator farmers from other farmers is lacking. Understanding the characteristics of demonstrator farmers is as important as the characteristics of the technology or practice being demonstrated in model farms. Thus, this article examines whether attitudes to risks distinguish demonstrators from non-demonstrator farmers. The results show that a larger proportion of demonstrator farmers will take risks as compared to non-demonstrators. The results also indicate that being less risk-averse increases the chances of being a demonstrator farmer. The implication is that while demonstrators tolerate the risks that accompany adopting technologies, the reverse could be the case for non-demonstrator farmers. Crucially, this finding will inform the decision-making of extension agents when choosing demonstrator farmers. This article will also serve as evidence for future programmes not to rely wholly on demonstrator farmers as the decisively indicative test of farmers’ overall risk attitude.JEL Codes: D81, C9, Q12
Despite the significant role of model or demonstrator farmers in disseminating new technologies, systematic and empirical examination of the behavioural characteristics that distinguish demonstrator farmers from other farmers is lacking. Understanding the characteristics of demonstrator farmers is as important as the characteristics of the technology or practice being demonstrated in model farms. Thus, this article examines whether attitudes to risks distinguish demonstrators from non-demonstrator farmers. The results show that a larger proportion of demonstrator farmers will take risks as compared to non-demonstrators. The results also indicate that being less risk-averse increases the chances of being a demonstrator farmer. The implication is that while demonstrators tolerate the risks that accompany adopting technologies, the reverse could be the case for non-demonstrator farmers. Crucially, this finding will inform the decision-making of extension agents when choosing demonstrator farmers. This article will also serve as evidence for future programmes not to rely wholly on demonstrator farmers as the decisively indicative test of farmers’ overall risk attitude.JEL Codes: D81, C9, Q12
The Influence of Perceived Role of Government on Energy Efficiency Improvement: Evidence from Manufacturing Firms in Malaysia
Margin: The Journal of Applied Economic Research, Volume 16, Issue 3-4, Page 309-326, August–November 2022.
Energy efficiency improvement is one of the effective strategies to attain energy sustainability. Firms’ perceptions and attitudes towards energy efficiency improvement have come to be seen as vital in the supply and demand management of energy. This research aims to examine the influence of perceived role of government on manufacturing firms’ intentions to improve energy efficiency. Data were collected from a survey, and the research model was empirically tested. Results from the empirical analysis show that perceived role of government significantly influenced manufacturing firms’ intentions to improve energy efficiency. In addition, the results indicate that there was a significant mediating effect of attitude towards energy efficiency improvement on the relationship between perceived role of government and manufacturing firms’ intentions to improve energy efficiency. Several notable policy implications can be drawn from the research results.JEL Codes: D22, L60, Q48
Energy efficiency improvement is one of the effective strategies to attain energy sustainability. Firms’ perceptions and attitudes towards energy efficiency improvement have come to be seen as vital in the supply and demand management of energy. This research aims to examine the influence of perceived role of government on manufacturing firms’ intentions to improve energy efficiency. Data were collected from a survey, and the research model was empirically tested. Results from the empirical analysis show that perceived role of government significantly influenced manufacturing firms’ intentions to improve energy efficiency. In addition, the results indicate that there was a significant mediating effect of attitude towards energy efficiency improvement on the relationship between perceived role of government and manufacturing firms’ intentions to improve energy efficiency. Several notable policy implications can be drawn from the research results.JEL Codes: D22, L60, Q48