The Covid-19 pandemic brought the world to a standstill, but the huge economic costs that followed forced it back on its feet.
‘Learning to live with the virus’ is becoming the new mantra, even as fear dwells at the back of the mind, containment is nowhere in sight, and economic costs are piling up.
Simply put, this amounts to accepting the existence of the virus and carrying on with outdoor activities with precaution.
Fewer government restrictions, better recovery rates and rising ‘pandemic-fatigue’ are playing a role. The World Health Organization (WHO) defines pandemic-fatigue as people “feeling demotivated by having to constantly take protective measures.”
The WHO’s September report estimated this fatigue to have reached over 60% of those surveyed in Europe, in some cases.
Evidently, it is catching up in India, too. People’s mobility declined at the first instance of a sharp rise in cases in July; but, interestingly another dip in mobility is not perceptible during the second instance of sharper rise in cases, in September. The association of increase in cases to decline in mobility trends seems to have weakened in September. To be sure, October and November saw a sharp dip in daily addition to Covid-19 cases in India, but the possibility of a second wave after the festive season lurks.
How are Indians likely to behave in the event of a second wave?
Using the Google COVID-19 Community Mobility Reports as a proxy, we look at state-level mobility data over the past couple of months to understand the conditions under which Indians chose to leash/unleash themselves.
This helps us draw further inferences on people mobility in a possible second-wave scenario.
The advantages of using this indicator are two-fold: a) It provides information at a higher frequency, and b) it is helping track economic activity near-time, thanks to mobile penetration.
For the purpose of this analysis, we look at mobility in retail and recreational avenues (‘retail mobility’). We choose this over other yardsticks such as mobility to workplace, as that would also be determined by employer-announced restrictions and/or availability of work-from-home options.
Similarly, mobility to ‘grocery and pharmacy’ would be influenced by availability of online ordering and delivery options. To that extent, we believe retail mobility would offer better insights into behavioural change due to the current pandemic.
Overall, the indicator shows retail mobility improved sharply in September in some major states in the east and south, and Maharashtra in the west.
These geographies had seen a sharp decline in mobility in July as afflictions surged. In September, despite caseloads rising, mobility improved as restrictions eased, recovery rates improved, and there was ‘pandemic fatigue’.
Retail mobility way better in September than July, even as cases rose faster
Let’s break this up further.
With India unlocking its economy from June, a return to economic activity was visible in terms of increasing mobility, from the troughs of April-May. But June-July started seeing a massive rise in cases (from ~287 per million as of June-end to ~800 per million by July-end). This meant, despite easing of restrictions at an all-India level, localised lockdowns were imposed. This pulled down mobility in several regions.
Thus, retail mobility in major states declined at this first instance, of a sharp rise in cases in July: state-imposed restrictions and possibly, fear of the virus, had a dampening impact on it. A decline in movement to workplaces and retail avenues also coincided with this sharp rise in caseload.
But interestingly, another dip in mobility is not perceptible during the second instance, of an even sharper rise in cases, in September.
Was the July decline in mobility associated with state-imposed restrictions or a rise in cases?
An analysis of state-wise restrictions shows that in July, in addition to a higher increase in cases per million (compared with the national average), states that imposed one or the other form of lockdown saw a sharper dip in mobility. Andhra Pradesh, Karnataka, Kerala, Tamil Nadu, Assam and Maharashtra were among those that faced a double blow. Hence, while restrictions existed across states, rising cases and fear inducing voluntary social distancing may have played a role in declining mobility. In contrast, mobility indicators in states like Chhattisgarh, Uttar Pradesh, Punjab, West Bengal and Madhya Pradesh were not hit as much despite state-imposed restrictions, since case spread was relatively lower.
For states that saw a sharp dip in mobility in July, what happened in September?
The association of increase in cases and mobility trends seems to have weakened.
For one, unlock phases in August-September allowed more and more economic activities. Though the Covid-19 infection curve also steepened (daily new cases crossed 90,000+ mark in September), mobility did not slump this time around. Rather, it increased across states, indicative of people (and governments) learning to live with the virus and Covid-19 fatigue beginning to show.
Two, the Centre’s directive during Unlock 4.0 in September, that states may not impose restrictions, would have aided mobility, too. Particularly, states like Andhra Pradesh, Assam, Odisha, and Tamil Nadu saw a sharper increase in mobility, though their case increase too was higher than the national average.
Three, improving recovery rates would have also given fillip to mobility. For states that saw a higher increment in mobility in September, particularly in case of Andhra Pradesh, Bihar, Odisha, Uttar Pradesh, and West Bengal, recovery rates also improved sharply, compared with the previous months.
Lower retail mobility in Kerala
Meanwhile, despite an improvement, states like Kerala and Karnataka in the south, and Maharashtra in the west, continued to show lower retail mobility trends in September vis-à-vis the national average. So while average mobility did not decline over time (even as cases rose), more Covid-19 affected states continue to see depressed mobility relative to other states.
Cues for a second wave?
October and November saw cases dip in most states. But the possibility of a second wave that is now being seen globally, raises concerns. Recent behaviour patterns observed across states during the September case peak could possibly provide cues on what lies ahead.
We believe that the rise in cases may be a determinant of revival or continuation of economic activity, particularly for contact-based services. But pandemic- fatigue, slacker government restrictions and higher recovery rates are other considerations behind individual choice between protecting lives and livelihoods.
In India, given the sharp hit to incomes, employment and the economy at large in recent months, livelihood choice appears to have prevailed. Other high frequency indicators (such as fuel consumption, automobile sales and freight transport, among others) suggest that economic activity has been slowly but steadily picking up post April-June quarter. Manufacturing overall is picking up somewhat faster, while services – given that majority of them are contact-based – are lagging. This phenomenon, we believe, could continue even in case of a second wave.
It also appears that unless the pandemic spins out of control, there may not be very stringent government restrictions and the hit to economic activity may not be as dramatic as earlier. A brief period where fear factor plays spoilsport cannot, however, be ruled out. Germany and the United Kingdom, for instance, are responding differently to the second wave. Both the countries have seen a sharp rise in incremental cases. Government restrictions have tightened in the UK, but not as much in Germany. Yet, retail mobility indicators are seeing a dip in both the countries. That could be indicative of a transitory softening in economic activity.
(This is a research paper published by global analytics company CRISIL on November 11, 2020)