Issue 23

A New Law Aims to Open Government Data to the Public. Can We Trust It to Deliver?

However unnerving the feeling of being surveilled is, collecting information about our interactions with the government has the potential to be immensely fruitful for journalists, researchers and the public. Whenever we fill out a government form or get our vaccinations done through public hospitals, the records we leave with them can be harnessed by those looking at it to trace back that interaction. Not only does this ensure transparency and accountability, but it can also be used to deduce important information about our economic and social reality.

Public institutions like government hospitals or the Statistical Ministry collect a massive bank of data from everyday operations and research. A new law, the Draft India Data Accessibility and Use Policy revealed on February 21 this year, has proposed to open this data to the public and controversially, put it up for sale in the private sector. Under this proposal, all data collected by every government body will be open by default unless specified otherwise and some other ‘special’ datasets will be out on the market. 

This move is in line with the international Open Government Data (OGD) movement which aims to liberate non-personal data collected by public entities and use it to formulate effective policy. According to the Working Group on Open Government Data at the Open Knowledge Foundation, OGD is essential for modern, democratic societies since it ensures readability, shareability, and transparency of government activities–citizens and civil society have the ability to peruse the state’s working together. 

While this sounds utopian for evidence-based policy-making, the historical records of governments generating, storing and releasing data in India have been muddy and many researchers have low levels of trust in the process. This is best illustrated by the Central Government’s ongoing fight with the WHO about the estimated pandemic deaths in the country. The WHO has estimated about four million excess covid deaths, which is in line with other scientific reports and shows staggering disparity when pitched against government data. The Center has disputed the report’s methodology and has itself come under fire for not providing coherent objections.

The story of India’s public data problem runs beyond the pandemic though, which has rightfully occupied our imagination for two years now. There are real issues with the way we collect data on the ground and they are not limited to emergencies like Covid. Long term policy goals like eradicating rabies by 2030 are getting stalled by the disaggregation of bodies responsible for collecting the relevant data and a lack of standardization. If two essential datasets generated by separate government offices do not use the same language or format, making them talk to each other and gain real insights becomes harder. 

Moreover, instead of obfuscating data to fend off criticisms, the government also has the option to simply not conduct the required surveys. The Household Consumer Spending Survey is one such important data collection drive which we have not heard of since 2011, until it was finally resumed this year. The National Statistical Office (NSO) is supposed to conduct the survey every five years but in 2017, the last time it was due, the NSO spoke of “data quality” issues that had prevented them from going forward with it. Many believe, however, that the survey was withheld due to an expected decline in consumer spending which would have reflected badly on the incumbent Modi government.

The overarching goal of OGD is instrumental–it is not only that government data should be open, but it also has to be actually useful. These foundational issues in how officials deal with data can make OGD platforms seem performative at best. The UN’s E-Governance survey conducted in 2020 which measured how robust a nation’s digital governance framework is relative to others placed India at the 100th rank amongst 193 countries included in the report. Without pooling resources to centralise, organise and secure the system that will eventually generate and carry the data, OGD might prove to be fruitless.

Rutuparna Deshpande is a second-year student of Politics, Philosophy and Economics at Ashoka University.

Picture Credits: Unsplash

We publish all articles under a Creative Commons Attribution-Noderivatives license. This means any news organisation, blog, website, newspaper or newsletter can republish our pieces for free, provided they attribute the original source (OpenAxis).

Issue 22

Sri Lanka’s State and Economy Are Crumbling. Could This Be the Watershed Moment for State Reform?

Despite being South Asia’s oldest democracy, having constituted a universal franchise as early as 1931, the island nation of Sri Lanka is far from donning the hat of a stable one and the path toward democratic prosperity remains murky.

The country has seen a bloody civil war between the minority separatist Tamil Hindu community and the ruling Sinhala Buddhist majority from 1983 to 2009. Post-war, its polity has been turning the page for the worse toward an authoritarian and hyper-militarized state under the stewardship of the Rajapaksa family, which has sowed its members in multiple important government positions.

The frontrunner of the family and Sri Lanka’s current President, Gotabaya Rajapaksa, has today found himself at the centre of boiling anger on the streets over his mismanagement of the economy, leading to the biggest economic crisis since the country’s independence in 1945. 

Ailing with a host of structural issues within the state machinery of Sri Lanka, ordinary citizens who had put their faith in the Rajapaksa government’s Sinhalese nationalist project are starting to turn against the dynasty rule. Change in this nation seems eminent, but what does change look like? To answer this question, we can begin by understanding how the post civil-war state was set up to create conditions for a failing state and the on-ground situation during the current economic crisis.

The Governance Crisis

While most media outlets have been focusing on the economic aspects of this crisis, Sri Lanka had been going through a much more deep-rooted crisis of governance that has set up the stage for its near collapse. Since 2009, when the ruling Sinhalese nationalist government decisively and unexpectedly defeated the separatist group Tigers of Tamil Eelam (LTTE), the Rajpaksas have been in power for most of the period. The current president’s older brother, Mahinda Rajapaksa was the president from 2005 to 2015 and is now the prime minister. In 2019, Gotabaya Rajapaksa won the presidency with 52% of the vote share and his party, the Sri Lanka People’s Front or SLPP enjoyed a supermajority in the parliament. 

This grip that the Rajapaksa family have had over the Sri Lankan state has resulted in policies that mainly benefit the ruling family and the Sinhalese majority. Violence against the Hindu Tamil minority and the even smaller Muslim and Catholic minority groups has been well documented. Since a major source of employment for the Sinhalese community is in the military, there has been widespread acceptance of increased military presence on the streets and further colonisation of the country’s Northern and Eastern provinces, where the minority population is concentrated. 

Infrastructure and other investments taken under this government have resulted in numerous dead or sinking assets for the state. Not only is this affair costly for the public, who pay for the Rajapaksa’s self-aggrandization (for example, the Mahinda Rajapaksa Cricket Stadium), it distracts from actual governance projects which have been given petty attention. Even civil society organizations have been silenced, journalists have ‘disappeared’ and political opponents have been humiliated. 

Civilians, even those who have previously supported the government’s agenda, have now come out to protest against Gotabaya. The slogan most prominent during protests is “Go Home Gota” after every other member than the president and his brother had resigned from the cabinet, including the finance minister who was sworn in just a day before. The public sentiment right now seems to be to oust the Rajapska family and move on. 

The Economic Crisis

The most jarring tell of the true severity of this crisis can be seen on the streets in the country’s capital Columbo. The city has been plunged into darkness with electricity cuts lasting for more than ten hours at a time. Essential supplies are sparse to find, including food and medicine – this has caused massive queues at shops and many hospitals have had to cancel routine services. 

For Sri Lanka’s poorest, the situation is unforgiving — most people have to make the choice between standing in long lines or going to work. Transport is also in peril because of fuel insufficiency, there simply is not enough energy to power public transport or for taxis and rickshaws to make even a marginal earning. Prices for every good on the market have soared due to inflation. The middle class, despite having its safety net of household savings, has not been spared from this wide-reaching conflict.

On the macroeconomic level, the country’s foreign reserves of the US Dollar have been depleted to three times its sovereign debt due to the tourism sector–the major source of dollar earnings for the nation — being hit hard during the pandemic. This has led to banks being unable to finance the import of the essential items that have disappeared from the market shelves. 

A shortage of the dollar also means that Sri Lanka will be unable to pay back the $51 billion debt it has taken from other countries and thus has led international agencies to downgrade the country’s credit rating. This has added to its woes by effectively cutting it off from international credit markets. 

What’s next?

Looking at this monumental crisis from a comprehensive state, society and economy angle we can deduce that this really does appear to be a tipping point for Sri Lanka. Though, if we have learnt any lessons from the Arab Spring, we know that authoritarian leaders who have embedded their power deep into the structure of the state can quash widespread protests. It is now up to Sri Lankans to consolidate their anger across ethnic and religious lines to have a successful watershed moment.

Rutuparna Deshpande is a second-year student of Politics, Philosophy and Economics at Ashoka University.

Picture Credits: Balkan Times

We publish all articles under a Creative Commons Attribution-Noderivatives license. This means any news organisation, blog, website, newspaper or newsletter can republish our pieces for free, provided they attribute the original source (OpenAxis).

Issue 21

Russia-India Oil Deal: A Question of National Interest or Morality?

On March 22nd, India’s top oil refiner Indian Oil Corporation hiked the prices of petrol and diesel after almost 140 days of stalling. This comes after a massive surge in global crude oil prices–the key factor in determining domestic fuel rates–driven by Russia’s invasion of Ukraine and the subsequent Western sanctions on Russian-sourced oil. 

Despite these sanctions, the Indian Oil Corporation recently purchased three million barrels of crude oil from Russia at discounted rates–something that has not sat well with Western leaders. Jen Psaki, US President Joe Biden’s spokesperson, said on Monday regarding the issue that while the US understands the economic reasoning, “the rest of the world, is watching where you’re going to stand as it relates to conflict, whether its support for Russia in any form“. 

Reactions like these, that highlight India’s need for oil yet urge the country to look beyond economic needs, have caused great uproar among some commentators and the Indian government alike. They claim that since India imports 85% of its oil needs, the decision to buy Russian oil was one of necessity and not one of active choice. Further, fingers have also been pointed at European nations that continue to buy Russian oil in large quantities.

The debate surrounding this controversial purchase has mostly been framed around the tension between a country’s ‘legitimate economic interests’ and morality. The implication is that by purchasing Russian Oil, India is inadvertently funding Putin’s war machine. So, what exactly are India’s ‘legitimate economic interests’ here?

India, as a developing country, has a large middle class that is very sensitive to income shocks, i.e. a steep fall in income due to events like rising crude oil prices. High prices for oil on the global market means that the cost for almost everything increases (inflation) since most industries depend on oil products. This leads to people ultimately having less money in their pockets because incomes remain constant while expenses increase dramatically. 

Understandably, a population with less money is prone to civil unrest. A harrowing example of this is Sri Lanka, which is battling its worst economic crisis since the nation’s inception and the subsequent public unrest. Among other factors, surging oil prices have left the country dry of petrol and diesel in its fuel stations. The government has now called in the army after two men were reported to have died while waiting for petrol.

This could explain why the Indian government has been firm in its aim to avoid oil insufficiency. A recent paper by Economist Pranjul Bhandari calculated the effects on the Indian economy if oil were to be priced at $100 per barrel for an extended period. The paper forecasted around a one per cent decrease in India’s GDP if that were the case. To put that yardstick into context, the current prices are above $115. These are India’s legitimate economic interests. But, does buying oil from Russia actually fund its military capacity?

Vladimir Putin has been the de facto head of state for Russia for more than 20 years now. In that time he has built around himself a helpful cadre of Billionaires and Oligarchs who fund his political and military endeavours. Many of these people are in the oil business and hence, when Indian companies buy oil from them, the money does go into Putin’s vault indirectly. 

Although, as pointed out in Rajya Sabha by Minister of Petroleum and Natural Gas Hardeep Singh Puri, India imported less than 1% of its annual requirement from Russia last year. So the impact of Indian purchases on Russia’s military capacity seems minuscule. This is especially low in comparison to the European Union, which relies on Russia for 27% of its crude oil. India is buying oil from Russia only because it is cheap oil and not because it is Russian oil. 

It must also be pointed out that the Western concern that this move signals India’s affinity towards Russia is not fiction. Over the years, Prime Minister Narendra Modi and Vladimir Putin have developed close personal ties. This is arguably one of the reasons Joe Biden has gone on record to call India’s confrontation with Russia “shaky”. Taking into account India’s abstentions at the UN and the fact that the country is considering a direct Rupee-Rouble corridor to bypass US Dollar based sanctions, this fear does not seem beyond a reasonable doubt.

Moreover, Professor of Political Science Oleksandr Svitych has pointed out in an opinion article that even from a utilitarian perspective, showing overt solidarity with the tightly banded NATO countries also has economic benefits. Put plainly, siding with the ‘good’ side has long term benefits of cooperation and progress. In the meanwhile, India can source its oil from other oil-producing nations and bear the cost of ‘good’ behaviour for later returns.

This liberal internationalist perspective misses one crucial point though. None of the top ten oil-producing countries, barring Canada, have a great track record of human rights. The list includes Saudi Arabia, the largest exporter of oil to India, which has consistently conducted unlawful airstrikes in Yemen. This fact effectively makes it so that if India were to start buying more oil from countries like the UAE or Kuwait in lieu of Russian oil, we would still be funding unlawful killings, unjust wars and brutal autocrats. Since switching producers does not solve the problem of giving money to bad actors, we can just buy from the cheapest autocract around, the argument goes. In this case, the cheapest autocrat happens to be Vladimir Putin. 

Thus, it would be economically and politically imprudent for India to not buy oil from Russia at this moment. Though, India does need to come out with a stronger stance on Ukraine for us to be able to shelter the western anger over it in the long term. 

Rutuparna Deshpande is a second-year student of Politics, Philosophy and Economics at Ashoka University.

Picture Credits: Wikimedia Commons

We publish all articles under a Creative Commons Attribution-NoDerivatives license. This means any news organisation, blog, website, newspaper or newsletter can republish our pieces for free, provided they attribute the original source (OpenAxis).

Issue 21

The State of Electric Vehicles in India

Much like NFTs, cryptocurrencies and artificial intelligence, electric vehicles are increasingly becoming a buzzword not just around the world, but in India as well. Recent years have seen a surge in the popularity of the automobile industry’s electric vehicle segment. Following Union Minister Nitin Gadkari’s recent announcements regarding the expected sale of electric vehicles (EVs) jumping 10 times within the year and his commitment that “the cost of EVs will come down to a level that will be at par with their petrol variants” within two years, has led to a lot of excitement and speculation around the future of EVs in the country. 

With the sale of electric buses rising by 1200% and that of four-wheeler electric vehicles rising 230% over the past couple of years, the data certainly seems to justify this excitement. Adding to the buzz, was Suzuki Motor’s recent announcement that it would invest Rs. 10,440 crore towards the manufacturing of electric cars and batteries in India, with the objective of rolling out affordable EVs in Japan and India by 2025. A study has revealed that the EV market is likely to be valued at around Rs. 475 billion by 2025, with electric two-wheelers alone accounting for 15% of the market.  

While the popular belief is that firecrackers and stubble burning are to be blamed for air pollution, the reality is that the real culprit is electric vehicles. Scientific studies suggest that vehicular emissions contribute to greater than 50% of the air pollution, while the contribution of industrial emissions is 10-13%. While these statistics vary around the year depending on weather and other factors, the reality remains that vehicular emissions overwhelmingly contribute to the air pollution crisis, particularly in developing countries such as India. Proof of this reality was also seen during the first lockdown, with air pollution dropping by a staggering 79% – is indicative of the damage that fossil-fuel-powered vehicles wreck on the planet. 

Environmental degradation aside, with the rapid growth of EVs, consumers would have a natural incentive to switch, given that the per kilometre cost is Rs. 1 for EVs, while the same is Rs. 10 for petroleum vehicles and Rs. 7 for diesel vehicles. Furthermore, central and state governments have given a huge push to EVs through tax breaks, subsidies, and schemes, such as the ‘Faster Adoption and Manufacturing of (Hybrid) and Electric Vehicles (FAME)-II Scheme. 

Though the sector is poised to enter a new period of expansion, innovation, and investment as commercial activities pick up and the Indian economy recovers in 2022, several obstacles stand in the way of EV’s future. While the government is actively supporting EV use in India, insufficient infrastructure, a shortage of high-performance EVs, and a high upfront cost are preventing widespread adoption. There are a number of possible market hurdles that hinder the EV industry’s capacity to meet expanding demand, including an inadequate charging infrastructure that continues to stymie increased penetration in the two-wheeler consumer sector. In the future years, the lack of a viable manufacturing environment for the materials involved with the EV revolution, along with the concentration of the supply chain in select places, is expected to bring these challenges even more into the light.

These problems are particularly likely to emerge in smaller cities, given the rarity of charging stations – as compared to petrol pumps which are dotted even in the countryside. A further challenge lies in the limited availability of nickel and lithium – key components for EV batteries. The recent power crisis of October 2021, wherein India witnessed a record shortfall of coal supplies, must serve as a reminder for India’s overwhelming dependence on coal – with 70% of the country’s power coming from such fossil fuels. For electric vehicles to be truly green, charging stations must be powered by electricity sourced from renewable sources such as wind, solar and hydropower. 

In spite of this seeming myriad of challenges, there seems to be a lot of optimism regarding the future of EVs in the country. A reflection of this is being seen especially in metropolitan areas such as Delhi, where the state government’s decision to mandate the adoption of a search percentage of EVs in cab aggregators’ fleets has received a warm reception. Leading by example, the Delhi government has mandated that 25% of all new cars joining aggregators should compromise EVs, and this number should amount to 50% within two years. A prime example of the success of EVs is seen in the success of electric car aggregator BluSmart, an Uber-Ola like service which has received funding from giants like British Petroleum and Tata Motors. In less than 3 years of operation, the start-up has curbed 2145+ tonnes of CO2 emissions through over 10,00,000 rides provided to customers in the Delhi-NCR region.

With large original equipment manufacturers taking the initiative to enter the EV component industry in order to lessen dependency on imports and achieve the government’s 50 percent localization requirement for government subsidies, the future of the segment is certainly bright. A comprehensive infrastructure that is inexpensive, accessible, and supports all consumer groups, along with a solid finance environment, governmental incentives, and technology developments, is anticipated to position the electric vehicle industry for major expansion over the next decade.

Abhiir Bhalla is an active youth environmentalist at a global level and has been working in the field of environmental conservation for over 8 years. Identified by the BBC World News as amongst the foremost youth environmentalists in 2020, Abhiir and his work have been featured prominently in the national and international media

Picture Credits: Unsplash

We publish all articles under a Creative Commons Attribution-NoDerivatives license. This means any news organisation, blog, website, newspaper or newsletter can republish our pieces for free, provided they attribute the original source (OpenAxis).

Issue 18

Budget 2022’s Big Infra Push May Flag in Face of Global Inflation 

This piece was first published by The India Cable and The Wire and has been republished here.

The Union Budget for 2022-23 can be seen as Prime Minister Narendra Modi’s last-ditch attempt at reviving private sector investment, which has stagnated for eight years. It must be worrying Modi that he is close to finishing a decade as prime minister, and his legacy could be remembered for poor growth in incomes, private investment, employment, savings and capital formation ― the most unenviable record for any prime minister since reforms began in 1991.

With higher revenue mobilisation and the government asset monetisation programme, the Budget aims to give a big push to public investment in infrastructure under the National Infrastructure Pipeline programme, which has identified specific projects in which Rs 20 lakh crore is to be invested annually for five years. This is the cornerstone of what finance minister Nirmala Sitharaman described as “crowding in private investment” through massive capital investment by the government. This is the core initiative to revive growth and employment. But will it succeed?

The budget allocates a 35% increase in funding for infrastructure, with Rs 7.5 lakh crore for 2022-23. It hopes that state governments will contribute their share of infrastructure funding under the PM Gati Shakti project, which aims to monetise government assets to fund new infrastructure projects earmarked in the National Infrastructure Pipeline. But to what extent will the “crowding in of private investments” be triggered by the government’s big public investment push?

The key risk flows from rising global inflation, which is at 30 year highs, and moves by central banks in the developed world to rein in liquidity and raise interest rates rapidly in 2023. The US Federal Reserve intends to raise interest rates three or four times to combat inflation, which can be the biggest dampener for growth and employment. India cannot be insulated from this broader trend and assumptions of GDP growth and employment generation based on massive infrastructure investment cannot but be impacted by global liquidity conditions and inflation.

M.K. Venu is a Founding Editor of The Wire. As an active economic and political writer, he has held leadership roles in newspapers such as The Economic Times, The Financial Express and The Hindu. He has written extensively on economic policy matters.

Issue 16

In the year of the crypto-creators raking it in, what about the energy bill?

Photo by Old Money on Unsplash

More than a decade had passed since American writer Blake Butler tried to sell his novel. Ironically titled Decade.

In February 2021, he sold it as an NFT for 5 ETH (short for cryptocurrency Ethereum). At the time, 5 ETH was worth approximately $7,570 (INR 5.5 lakh). It was more money than what his previous books, published the traditional way, had made together. Value is up since. This one in GIF mode is downloadable to read as a PDF. 

In an interview with Literary Hub, Butler says of NFT, “It feels like a moment for reinvention, where the field is as wide open as you could want,” But before getting to what it means for the environment let’s see, what in internet heaven is an NFT? Here is a hypothetical story to explain this.

Give me those cards,” says the teacher while snatching the action superhero cards from the students in the classroom. She then locks up the cards (not the kids)It’s not fair,” one student cribs to the other. “I wish nobody stole our own cards from us,” says another, ready to howl.

In 2021, digital versions of these cards or books can be kept as Non-Fungible-Tokens or NFTs. These are unique digital files you cannot touch or put in your bag but just see on a screen. So, no teacher can take away a superhero action card, if it is in the form of an NFT. But how does someone own one?

One student feels that the other student has a card they want. They exchange cards. Many others follow suit. Now, to avoid confusion, everyone writes down who owns which cards in each of their notebooks. They keep updating their notebooks real-time. This notebook is a ledger. 

When a student tries to cheat by showing more cards in their notebook than they actually have, it simply does not match with the other notebooks. So no cheating. But what if a student without any cards wants to get their first one?“Those who update the notebooks will get yellow coins,” a smart chap puts an idea forward, “people can use these coins to buy the superhero action cards.” 

Those writing on notebooks may find it boring to maintain, but cryptocurrency is the reward for those who maintain a ledger. You get it? This is not just child’s play, but an internet model for buying and selling things, in a virtual marketplace worth millions. A collection of such notebooks, action hero cards and children, online is like a blockchain network in operation. 

Every computer is constantly creating copies and maintaining such ledgers in a decentralised way. While regarded as low on error, this system is heavy on energy use. Harvard Business Review says, “Bitcoin (the most common cryptocurrency) currently consumes around 110 Terawatt Hours per year — 0.55% of global electricity production, or roughly equivalent to the annual energy draw of small countries like Malaysia or Sweden.” Yet, people are increasingly using it

Writers like Indian self-help author Arun Batish, published EKA, as a paperback in 2019. It is available as an NFT too. In 2020, N.E Carlisle published a young adult book, Mermaid Eclipse. In the same year, she announced it as the first NFT Novel in collaboration with cyber artist, Lori Hammond.  They have launched this magic tale as an NFT with the book’s manuscript and a signed copy of the original artwork. An Indian and a global example, but you get the drift? NFT is helping writers.

Continuing with the student analogy, what happens next? One student puts forth a demand, “Everyone has to write this condition in their notebooks, I will pay for this action card only if it allows me to win the card competition tomorrow.” The seller can choose to sell the card if the other party agrees to this condition. The buyer too knows the terms. A condition like this is called a smart contract.

RVRS, one instance of a cryptocurrency, is using such a smart contract. When someone is buying or selling using this token, they are asking its users to agree on a condition. Which in their case is, “we will be using a tenth of your transaction amount to remove carbon dioxide from the atmosphere.” RVRS says they support tree planting projects around the globe.“Does anybody need a shovel?”, asks a volunteer, in their PR tree-planting drive video

As the first year of a new decade wind down, NFT sales and creativity for its collaborators will define the upcoming decade. But so will the uncryptic truth that Terms and Conditions are the only major superhero action card the industry has authored, in exchange for its carbon footprint. So far.

Cefil is a student of Mathematics and Environmental Studies at Ashoka University. 

We publish all articles under a Creative Commons Attribution-NoDerivatives license. This means any news organisation, blog, website, newspaper or newsletter can republish our pieces for free, provided they attribute the original source (OpenAxis). 

Issue 12

Delineating the Consumption of Luxury Goods in a COVID-hit World

For its 100th  year celebration in 2021, GUCCI under the creative direction of Alessandro Michele, rolled out its ‘Beloved’ campaign, strategically designed to strengthen the sales of their bags. Initiated on 22nd April 2021, the campaign featured four of GUCCI’s globally beloved bags namely Dionysus, the GG Marmont, Jackie 1961 and the GUCCI Horsebit 1955. The campaign, designed in the form of a late night talk show, had a star-studded lineup which included James Cordon, Dakota Johnson, Harry Styles, Awkwafina, Serena Williams, Sienna Miller and Diane Keaton. The campaign creates a nostalgic talk-show feeling of the 90s where the stars of the show were GUCCI’s four all-time iconic bags themselves.

Luxury brands like Yves Saint Laurent, Cartier, IWC, GUCCI saw a staggering fall in their sales, due to the COVID-19 pandemic. The coronavirus first hit China, spreading to Italy and other European nations (home to many luxury labels). This resulted in a steep fall in the sales of luxury goods, due to Chinese customers accounting for a 35%  share in luxury purchases globally. With the pandemic hitting the luxury goods industry all around the world, the impact is expected to be long lasting.

The sales for GUCCI specifically were amongst the worst hit by the virus outbreak due to closure of stores, since China serves as a big market for the luxury brand. In the first quarter of the outbreak in 2020, the sales for the fashion label fell by 23.2%, which makes up for the major revenue for Kering, causing a total fall in its overall sales by 15.4%. However, with its strategic launch of the ‘Beloved’ campaign at the time of ‘unlock’ in Europe, the fashion label is looking to rebound its sales in 2021. 

The year 2021 was expected to bring many more opportunities for these luxury labels in terms of rebounding their sales and launching limited seasonal collections. However, the national lockdowns in the UK and other European nations like Germany, Italy and France during the Spring/Easter season, which brings in a plethora of customers for these luxury brands, continued to create anxiety around the sales of goods. Compared to 2020, these luxury brands were better braced to tackle the 2021 lockdown, due to sales and purchases moving to digital platforms. The lockdown also cut down tourist shoppers that contributed massively towards the sales revenue. Moreover, as per VOGUE Business, these international tourists are not expected to return before mid 2022, and the latest lockdowns do not show any improvements in these forecasts. 

Empty Via Montenapoleone (Milan’s largest luxury shopping street) in Italy
Image Courtesy: Bloomberg Quint

Since the outset of the pandemic last year, there have also been dramatic and accelerating changes in consumer behaviour and consumption in regards to luxury shopping. Simultaneously, as a result, fashion labels have had to customize products and campaigns to keep up with the market trends and consumer behavior catering to the needs of their loyal clientele.

More and more shoppers have been turning to online shopping in place of in-person visits to physical stores, given the perturbations of contracting the virus. Moreover, according to the Boston Consulting Group, the pandemic has made apparent the deep economic and social inequalities that exist within the society, making less people comfortable with the show of conspicuous affluence and resources, thereby altering their shopping patterns and habits.

Though the pandemic has affected the sales of all luxury brands, certain categories of goods have not seen any decline but rather a spike in their sales. The classic and signature timepieces from luxury labels have been continuing to sell out. This can also be attested by the fact that GUCCI decided to dedicate an entire star-studded campaign to advertise its four all-time classic handbags, that have contributed massively to the label’s revenue. 

The increased sales in signature and classic goods can also be credited to the surge in digital shopping which has made these goods accessible to people globally without having to travel. Moreover, these goods are also perceived as great profitable economic investments, with specific products like Hermes Birkin Bags having a 34% Return on Investment as of 2020. Consumers of luxury products are now buying them more with the purpose of investment than mere consumption. 

To ensure rebound in sales, luxury brands like Dior, GUCCI, Chanel, YSL have also launched makeup and skincare lines, especially for Spring 2021. This is because makeup and skincare are the two categories of products that have a consistent demand all throughout the year and are more than often remain uninfluenced by seasons and/or holidays.

Looking at the volatile nature of the market given the pandemic, luxury brands will have to globally revamp and strategise the products they plan to release. The few trends that companies will have to look into are sustainable and vegan products, subtle and simple designer wear with less emphasis on gaudy embellishments and logos, inculcating more culturally inclusive and diverse designs and designers in their products as well as in the workforce respectively. 

The pandemic, in many ways, has shook luxury brands from their comfort zones, breaking their bubble of consistent revenue and loyal clientele. It has not only challenged them economically but also culturally and socially to produce and create goods by keeping up with the trends in time. Although the pandemic in 2020 might have impacted these luxury brands negatively – especially their revenue and financial stability, it has also pushed them to create more and more culturally inclusive products. 

Image Courtesy: GUCCI

Muskaan Kanodia is a junior at Ashoka University, double majoring in English and Sociology. When she is not drowning in books, you can find her drawing and smiling at strangers on the ghats of Benaras.

We publish all articles under a Creative Commons Attribution-Noderivatives license. This means any news organisation, blog, website, newspaper or newsletter can republish our pieces for free, provided they attribute the original source (OpenAxis).

Issue 12 Issue 13

It is the ‘Tax-the-Rich’ hour!

On 31st March 2021, The Guardian reported that New Zealand was raising its top rate tax for the country’s highest earners to 39% and also raising its minimum wage to $20 an hour. On 9th April, the New York Times reported that the budget for the coming fiscal year includes a long-overdue increment in the income-tax cuts of people making more than $1.078 million. Back in April of 2020, Landais, Saez and Zucman proposed a Progressive European wealth tax to fund Europe’s COVID response. However, the idea of taxing the rich started reappearing in mainstream media a little before the pandemic itself hit. In the recent US Presidential race, two candidates, namely Bernie Sanders and Elizabeth Warren, proposed two separate models of progressive wealth taxation as a policy suggestion in their campaigns. These models were also designed by UC Berkeley Economists Emmanuel Saez and Gabriel Zucman. But despite Europe’s failure with the wealth taxation system, one may ask the very obvious question, ‘Why expend time, effort and resources on a failed policy?’

The progressive wealth tax model presented by Saez & Zucman is widely lauded for its striking approach towards countering the flaws persistent in the European system and coming up with a more effective system suitable for the USA. They argue that a wealth tax is a potentially more powerful tool than income, estate, or corporate tax when it comes to addressing the issue of wealth concentration. This is because the wealth tax goes after the stock rather than the flow, i.e., it does not target the annual income, but rather the accumulated wealth of the individuals. The two striking features of their model are that a) they propose a fairly high threshold, beyond which wealth will be taxed, which ensures that it doesn’t lead to the problems of illiquidity (as was the case in many European countries) and b) they can find ways to counter tax evasion, which was one of the main reasons behind the failure of European countries’ wealth taxation systems. They argue that since the USA’s taxation system is citizenship-based, it makes the USA’s system much less vulnerable to mobility threats than other countries.

One of the major contentions against any sort of wealth tax or taxation targeted on the rich is that it disincentivizes them from working hard and/or innovating. However, Smith et al., argues that most top earners derive their income from human capital rather than financial capital. And while credit constraints could perhaps be a problem, a wealth taxation model with a high exemption threshold like the one presented by Saez & Zucman, by definition, spares the credit constraint. Moreover, they also argue that it is the established businesses that gate-keep innovation in their industries by fighting any new competition in order to maintain their dominant position. Moreover, it has a significant impact on income inequality, because wealth taxation prevents maintenance and growth of people’s existing accumulated wealth, and specifically reduces consumption inequality.

Although wealth taxation may seem like a good idea on a solely altruistic basis as well, it might actually be very instrumental in poverty targeting policies, especially for countries that face a severe lack of resources, like developing countries. In fact, a targeted and strictly enforced wealth taxation model could be very helpful for a country like India. Saez & Zucman argue that tax evasion depends only on the design of the taxation system and the strength of enforcement, both of which are active policy choices. The long-run revenue-maximizing wealth tax rate according to their model is about 6.25%, which they categorize as a fairly high rate. According to S Subramaniam, if India’s top richest 935 families’ wealth was taxed at a flat rate of 4%, it would be able to generate revenue that is equivalent to 1% of India’s GDP. This money could then be used to fund more targeted schemes such as a Quasi-Universal Basic Income (QUBI). There could be various QUBIs like ones that provide a guaranteed income to women or one that seeks to provide a basic income to people that have lost their jobs owing to the pandemic, or even to automation.

It is certainly no coincidence that policies targeted at taxing the rich are making a comeback, it has taken relentless effort on part of activists around the globe to bring this up to the forefront. The New York Times reports, about the increment in income taxation on rich in New York, that: “In January, 170 grassroots organizations along with dozens of legislators formed the Invest in Our New York coalition, which in the subsequent months made close to one million calls to lawmakers, sent more than 260,000 texts to residents across the state, held 100 teach-ins and placed hanging cards declaring “Tax the Rich” on 120,000 doors.” And while the debate about taxing the rich has been around for long enough, it does seem like the world is finally ready to embrace radical measures to reduce inequality and make the world a more equal place to live in (at least in economic terms).

This article has been republished from LiveWire with permission of the author.

Ishita is currently pursuing her postgraduate diploma in Entrepreneurial Leadership & Strategy, and has recently completed her undergraduate studies in Economics & Finance, from Ashoka University. When she’s not stressing about the next thing and over-planning her coming activities, she can be found discussing issues related to politics, managing her page @angrybrowngal.

We publish all articles under a Creative Commons Attribution-NoDerivatives license. This means any news organisation, blog, website, newspaper or newsletter can republish our pieces for free, provided they attribute the original source (OpenAxis).

Issue 11

Issue XI: Editors’ Note

The past year saw COVID-19 and lockdowns as the only issues one extensively engaged with, both in their personal and professional lives. The question, “how has the pandemic been treating you?” slipped into every catch-up conversation with peers, friends, family and colleagues. With the current surge of cases in India once again, it is safe to say that even with the vaccine, the pandemic still continues to dominate a major part of our lives. We are constantly reminded of it every time we have to step outside our homes or log in to an online meeting or a Zoom birthday call. 

With this issue, we aim to provide our readers with a ‘pandemic-break’ and delve into stories that are equally important but may have been sidelined with constant COVID updates from newsrooms. 

To begin with, Madhulika Agarwal addresses an essential question revolving around what makes an event ‘newsworthy’ in the first place? And who has the authority on prioritising which news is worth the consumers’ attention? With Amazon’s Twitter antics having grabbed the attention of the media, Samyukta Prabhu and Rohan Pai use this opportunity to highlight the gig workers’ rights that have been sidelined by tech giants such as Amazon, specifically during the course of the pandemic. 

Akanksha Mishra covers the consequences of the Afghanistan peace deal on the country’s population, revealing a critical understanding of the negotiations between three stakeholders – the Taliban, the Afghan government and the United States. Speaking of the United States, Karantaj Singh analyses 100 days of Biden administration by critiquing as well as applauding his contribution towards restoring America’s identity in the global community. With New Zealand’s recently passed miscarriages bereavement leave law, Advaita Singh captures the reader’s attention by examining the relationship between workplaces, the economy and personal grief.

Closer to home, Saaransh Mishra confronts the structure of quasi-federalism in India and its exploitation by the ruling central government in implementing controversial laws such as the recent GNCTD Bill. Furthermore, Muskaan Kanodia explores the vote-bank anxieties behind the intense dedication of political parties towards temple beautification, which appears to complement the rise of religious politics in the country. Ridhima Manocha analyses the ruling government’s contradictory campaign attitudes towards CAA-NRC when contesting the current Assam Assembly elections. Meanwhile, Vaibhav Parik questions India’s Election Commission’s decision to hold the ongoing Assembly elections in multiple phases in the state of West Bengal.

Aarohi Sharma brings back the essential climate change debate and delves into why individuals continue to deny its existence and widespread impact. For our sports enthusiasts, Kavya Satish explores the possible reasons for the increasing loss of viewership and sponsorship in F1 and what it means for the future of the sport. 

To emphasise the immense strain that Coivd-19 has placed on our global healthcare systems, Saman Fatima explores how this has resulted in the marginalisation of treatments of other prevalent diseases among several populations. 

While other stories may continue to struggle to win the fight for our attention with the intensity of the pandemic, we hope our readers are able to take a step back and keep themselves updated with events beyond rising Covid-19 cases and vaccinations. 

-Ariba, Ashana Mathur, Harshita Bedi, Rujuta Singh

Picture Credits: REUTERS/Athit Perawongmetha

Issue 11

To Have Loved and Lost

Trigger Warning: mentions of death, mental health issues

“Grief is a most peculiar thing; we’re so helpless in the face of it. It’s like a window that will simply open of its own accord. The room grows cold, and we can do nothing but shiver. But it opens a little less each time, and a little less; and one day we wonder what has become of it.”  

Arthur Golden, Memoirs of a Geisha

Death is inevitable. Ultimate. Irreversible. As the fundamental truth of life, we are bound to encounter death. Unfortunately, to grieve is a matter of privilege; to allow yourself the time to break down and build back up again is a luxury not many can afford. In the past, people have returned to the workplace after demises, pushing against the inner storm of despair. Barring the few designated days of mourning, grief never became a strong reason for seeking paid leave, thereby, forcing employees to resume work within days of such life-altering tragedies. 

New Zealand recently became the second country to implement miscarriage bereavement laws — granting women and men the right to paid leave after miscarriages and stillbirths. India already had a similar legislation in place that entitled women to a six-week paid leave under the Maternity Benefit Act, 1961, in such cases. These governments have recognised the soul-crushing pain experienced by parents by passing such legislation. Hence, these acts are symbols of our humanity; our understanding of life and loss. 

While they are certainly socially evolved and humane, given their intrinsic link to the labour market, these laws provoke questions about their economic impacts. The impact of grief on productivity and employment raises some important questions: What are the economic consequences of paid leaves? Is grief a good enough reason for granting days off work? 

Productivity Pause

Grief is more than just a fleeting emotional state — it is the source of psychological and physical stress that can range from depression to anxiety and hopelessness. In fact, a medical side effect of bereavement is an impaired immune system. Since mental and physical health are integral parts of human capital, when emotions and grief run wild, productivity takes a severe hit. 

Despite realising their inability to work, workers feel the pressures of presenteeism.  If you have ever been to work even though you did not feel up to it, you understand presenteeism. A recently studied phenomenon, it refers to employees still habitually working long hours/attending work even though they are not fully functioning well (mostly due to medical reasons and even other concerns) ultimately leading to lower productivity. Workers who are insecure about their jobs often display presenteeism.

Presenteeism is harming businesses as the illusion of efficiency prevents managers from planning better. When six  workers are on the job but two are working at reduced capacity, information asymmetry prevents the manager/owner from efficiently allocating the workload because presenteeism is not apparent. Hence, the quality of output suffers and average efficiency is dragged down. In contrast, if the unproductive workers were on leave, the reduction in team size and efficiency would be glaringly visible and the managers would be able to better plan the tasks knowing fully well that they are working with a smaller, but productive team. 

Given that long bereavement breaks are not normalised, and their medical impacts are not understood, many workers feel insecure about their job status while considering taking time off work. Hence, employees are ultimately faced with the unfair choice of either resuming work with a diminished ability to perform or quitting the labour force. 

Workers deciding to quit the labour force would imply forgoing a source of income. The absence of financial stability can further reinforce any depression or anxiety felt by the employees. They might also lose out on new skills by being out of work for long periods which, in turn, would reduce their human capital relative to the rest of the workforce. With lower human capital, their employment prospects would further decrease. These consequences for workers translate into bigger problems for the economy as unemployment leads to wastage of resources and lower economic output. 

In this lose-lose situation, data estimates the economic cost of bereavement in the UK workplaces to be nearly £23bn a year. This renders a loss in tax revenue estimated to be around £8bn a year. Behind these massive figures, the study indicates that “the majority of the economic cost arises from lost productivity in the workplace (presenteeism), rather than from time away from work.”

A viable solution? 

Neither declining productivity nor workers’ exits from the labour force are optimal cases for the economy. Therefore, a solution would include retaining workers or preventing productivity dips. By providing paid bereavement leaves, firms ensure that workers have the option of staying employed. In a way, paid leave lifts the pressure of ‘showing up’ at work and allows workers to recuperate emotionally without worrying about economic welfare and finances. Once workers do finally return to work, they are relatively more emotionally stable and will be able to perform better, preventing any problems caused by presenteeism. Paid leaves also foster a stronger attachment to the labour force with workers more committed to working and staying in employment. With a more dedicated and stronger labour force, the national output  is expected to increase. 

Understanding the merits of paid leaves, the miscarriage bereavement laws passed by the New Zealand government are a giant leap forward. They recognise the significant emotional implications of stillbirths and miscarriages — losing a child has been ‘classified as one of the most extreme stressors a human can face’ which causes the parents’ productivity to reduce to a quarter of what it was before. Most importantly, these laws standardise access to paid-leave and propagate equality. Given that all workers do not have the financial background to quit their jobs, the legislation ensures that despite varied working conditions, workers have the ability to avail the option of paid leaves. Hence, it fosters an environment of equality while prioritising workers’ welfare. 

At its core, such laws recognise that workers’ welfare need not be at odds with the economic well-being of the country. Workers are 13% more productive when they are happy. Hence, it is difficult to isolate economic growth from the emotional welfare of the workforce. By providing adequate time and opportunity for employees to process their loss, these paid leaves act as a safeguard for the interests of the workforce against the tragedies of miscarriages and stillbirths. 

Picture Perfect? 

Despite their merits, these laws come with strings attached. Paid leave is a controversial issue amongst employers since they are paying the employees for essentially no work. Some firms might prefer workers showing up at offices despite the recent deaths of loved ones. By availing paid leaves, a worker’s contribution to output is zero. By using the logic of ‘something is better than nothing,’ employers would still prefer to enforce their older methods. 

Paid leaves for parents after stillbirths or miscarriages are certainly a social issue. However, the effects of grief on productivity make it an economic issue in tandem. This gives the opportunity for inclusive legislation that can improve economic conditions and boost economic growth. The unpredictability of death makes it all the more important to recognise the various losses humankind shares and subsequently address them in legislation. Because let’s face it, for someone still reeling from the shocks of the death of their loved ones; for someone still braving that gush of grief blowing through the window in that frigid room; even a few days off work mean everything. 

Advaita Singh is a second-year student of Economics at Ashoka University. She is also the President of the Economics Society at Ashoka. 

We publish all articles under a Creative Commons Attribution-Noderivatives license. This means any news organisation, blog, website, newspaper or newsletter can republish our pieces for free, provided they attribute the original source (OpenAxis).