Crush the fear economy

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 It is not about bending the Corona Virus (COVID ) pandemic curve. It is not about   preventing GDP growth rates from tumbling.  It is also not about the pain of hollowed out job markets.  At this moment in India and elsewhere,   it is about  crushing the fear economy curve created by the pandemic. And the epicentre of the fear economy is the household ( call it family if you want) .Yes , the proverbial household  , the tacit space  that everyone remembers only when  a  census operation is around the corner.  

Unlike a Tsunami  disaster where destruction  of human lives and property is abrupt   and where the central issue is about addressing the  trauma of  the survivors  , COVID 19  is about  the fear of falling  a victim to   an insidiously spreading virus .  Also unlike a Tsunami or other disasters the COVID problem needs to be ‘contained’   and the onus for this rests with households. The Epidemic Diseases  Act, 1897   which was brought in by the British  Raj against the backdrop of the bubonic plague in Bombay, was a punitive law  that was designed to regulate ‘people’. Though the National Disaster Management Act (NDMA) of 2005  is development and welfare oriented,  its focus  is only   on ‘areas’  affected by disasters. By comparison , ‘The Containment Plan for Large Outbreaks Novel Coronavirus Disease 2019’ very recently released by the Union Ministry of Health and Family Welfare is a great leap forward as it mentions about targeting  ‘families’ for   psychosocial support. It is vital that the term ‘disaster management’ employed in the NDMA  be extended to include in its ambit  virus and bacteria triggered  pandemics  with families and households as  focus points.

Paul Valery’s line ‘ We hope vaguely, but dread precisely’  sums the fear psychosis that tends to grip large  number of  households observing social distancing  to quell COVID 19.  At least  four classes of fears are common to all , viz,  the fear of getting infected by COVID , the fear of running out of purchasing power , fear of scarcity  of essential goods and fears about the longevity of the pandemic.   Other fears are specific to the social situation of households. Families of COVID warriors live in constant fear about their breadwinner’s life. Migrant workers and daily wagers are caught between fear of infection on the one hand and fear of irrevocable loss of livelihood  on the other. India’s middleclass who are holed up inside their dwellings  worry about the drain on their financial resources  in the event of getting infected.  Socialisers and ‘go outsiders’ who ‘ like to see and be seen’  (to cite Foucault )  swing from  fear of infection to fear of  losing out on their zest for life. Households with asymptomatic victims fear the social stigma of detection and enforced confinement.
What compounds fears of the type mentioned  is the hide and seek play of  the deadly virus. China’s successful  lock down of Wuhan/ Hubei  was the toast of  sections of international media  during  the first week  of March. It   was contrasted  with  the clumsy  partial  lock down  systems that   Italy tried out and failed.  However in early April,  just when it looked that Wuhan was up and  running came a spate  of new incidents of infections, this time from asymptomatic cases.  Such unexpected reversals evoke fears about  the problem persisting endlessly.

In a recent issue of the New England Journal of Medicine, Harvey Fineberg  writes that the corona   pandemic   would persist over a longer time frame than one would like to think. According to Fineberg   economic recovery  in COVID 19 affected countries will stretch even farther in time.

Every ounce of what Harvey has written is true. The proximate reason for slow economic recovery could be the  lingering grip of  the economics of fear amongst  households concerned. Anecdotal evidence suggests that the COVID fear economy is characterised by   patterns of economic behaviour that run contrary to the canons of rational consumer theory that underlie normal time economics. True, the  lockdown regime  in India has ensured door to door deliveries of PDS goods  to Jan Dhan beneficiaries. It is equally interesting to see in certain localities, the emergence of informal social partnerships that ensure that supplies of essential goods are not disrupted.

However there are pockets where Jan Dhan families suffer from insufficient liquidity  partly due to reluctance to spend and partly due to  difficulties in accessing operate their accounts due to social distancing regulations. This coupled with discontinuance of ‘take delivery and pay later’ arrangements  by small stores  has left  these vulnerable sections in a lurch. The other not so good  lock down story  is the failure of  large e-commerce platforms to execute  door to door deliveries. This has pushed their nervous customers to crowd at local physical stores resulting in panic buying and hoarding.

The net effect of the fear syndrome is the inertia to spend which causes household  consumption  to decline  even when supply of essential goods is not constrained.  This is a perverse state of affairs which if allowed to linger can delay the revival of the normal time economy in the post pandemic phase.

For the fear economy to be reversed door to door delivery of cash and essential  goods needs to take place  and a  decisive decision is taken to draft  India’s  formidable army of  unemployed doctors under the aegis of  ‘Ayushman Bharat’  to provide  door to door health and psychosocial services to households on the lines of family doctors system practised by Cuba.
There is more to this.

India’s Ayushman Bharat is holistically conceived as an integrated health and environmental sustainability approach to wellness.  If the idea of household based family doctor system is permanently built into India’s Ayushman Bharat Plan, it will sow the seeds of an alternative bottom up growth model for the Indian economy that runs on robustly self-reliant local economies. This would then be one of most enduring upsides of the current crisis we are facing.

Views are personal.

*A. Damodaran is an Economics and Social Sciences professor at IIM Bangalore.

[This article has been published with permission from IIM Bangalore. www.iimb.ac.in Views expressed are personal.]