COVID-19 Side effects: Can Earth’s Environment Recover and Hit a Reset Button?

environment

The flagship environmental channel, National Geographic and the reputed fact checker, Snopes recently debunked social media claims regarding improvement in the environment like increased dolphin and swan sightings in Italy. In the meantime, this has spiked up fresh debate between environmentalists and scientists worldwide: Can the human social isolation adopted to fight against the ongoing COVID-19, do any good to revive Nature? Or is it just a temporary distraction to the underlying problem at hand, i.e the pandemic itself?

Crux of the Matter

Small Step To Giant Leap in Carbon Footprint Reduction?
The transportation sector is the biggest contributor to greenhouse gas emissions in the United States. As per reports released by researchers at Columbia University (CU), emission of carbon monoxide from cars and planet heating Carbon Dioxide (CO2), has reduced by nearly 50% as compared to 2019, improving the overall environment. With schools and businesses adopting strict work from home policy worldwide, there could be a further decrease in travel carbon footprint.

An analysis by China’s Ministry of Ecology and Environment suggests that there has been a 35% drop in energy usage of fossil fuels like coal, over a two week period due to less industrial activities. The Center for Research on Energy and Clean Air estimates it to be equivalent to 200 million tons of CO2. In Europe, satellite images show nitrogen dioxide (NO2) emissions receding in northern Italy, Spain, and the UK.

NASA’s Goddard Space Flight Center:
The Epicentre of COVID-19’s Pollution Footprint changed in just about a month!

On the flip side, the household carbon footprint has the potential to increase. It depends mainly on weather conditions, geography and different family lifestyles followed at home. According to Jacqueline Klopp, co-director of the Center for Sustainable Urban Development at CU, “People may spend more time watching television or using appliances if they’re cooped up in their houses, increasing household’s carbon footprint.”

India Takes Deep Breaths as Air Quality Improves
Over 90 cities in the nation have recorded minimum air pollution recently during the ongoing 21 days lockdown period aimed to control COVID-19. As per figures generated by the Government-run System of Air Quality and Weather Forecasting and Research (SAFAR), there has been a noteworthy drop in PM2.5 (fine particulate pollutant) by 30 percent in Delhi. In Pune, Nitrogen Dioxide (NO2) pollution has reduced by 43 percent, in Mumbai, by 38 percent, and in Ahmedabad, by 50 percent.

What Has Happened in the Past?
Julia Pongratz, professor at the University of Munich, Germany, discovered that epidemics left subtle prints on atmospheric CO2 levels, by measuring tiny bubbles trapped in ancient ice cores. The list included epidemics such as the Black Death in Europe in the 14th Century and smallpox in South America. Even in the case of a financial crash of 2008-09, there was an overall dip in emissions of 1.3%. Combined emissions from manufacturing, industrial processes and construction round up to 18.4% of global anthropogenic emissions.


Growth of global carbon emissions halved during 2008-2009 recession

Challenge Yet to be Addressed: Clean Energy Plans Paused
A global recession as a result of coronavirus shutdowns could stall the shift to clean energy. If capital markets lock up, it will become difficult for companies to secure financing for planned wind and electric grid projects, and it could bomb proposals already made or new projects. Low prices could further depress electric-vehicle sales and make people less inclined toward projects like retrofitting energy-saving homes and offices.

As a matter of fact, the world’s largest share of solar panels, wind turbines, and lithium-ion batteries are produced in China. The Dragon land is already relaxing environmental supervision of companies to stimulate its economy, which means that the aforementioned 25% cut in carbon emissions could evaporate, followed by even more emissions than before. Similarly, US has a $2 trillion stimulus bill passed earlier this week and is being popularised as the largest fiscal stimulus package in modern American history. It does include direct payments to individuals and extended unemployment benefits but not relief for renewables, such as crucial tax credit extensions for solar and wind energy.

Sneak Peek to a Zero-Carbon Economy?
The world can have a promising future of coexistence of both Human Beings, natural environment and other living species including birds and animals if there is both public and political will with international cooperation. Policymakers can further move forward with their climatic plans of action while keeping the global economy stable, as stated by the European Green Deal, a new policy package that commits European Union member states to zero emissions by 2050.

On the digital front, Tech giant IBM has already launched a Call for Code Global Challenge which addresses both climate change and COVID-19 and shall involve different coding communities round the globe. With the COP26 climate summit in Glasgow planned to be derailed till the pandemic cools down, online environmental activism is parallelly being carried out. Thus not with mere words, but by actual actions, we can look forward to a greener, more sustainable future.

India doing it’s own part in bringing together willing climate patriots

Complete coverage of the Global Coronavirus effect

Curiopedia

A carbon footprint is historically defined as the total greenhouse gas (GHG) emissions caused by an individual, event, organization, or product, expressed as carbon dioxide equivalent. Greenhouse gases, including the carbon-containing gases carbon dioxide and methane, can be emitted through the burning of fossil fuels, land clearance and the production and consumption of food, manufactured goods, materials, wood, roads, buildings, transportation and other services.

An individual’s, nation’s, or organization’s carbon footprint can be measured by undertaking a GHG emissions assessment, a life cycle assessment, or other calculative activities denoted as carbon accounting. More Info

2017 co2
Global emissions increased from 2 billion tonnes of carbon dioxide in 1900 to over 36 billion tonnes 115 years later.

Air pollution kills an estimated seven million people worldwide every year. WHO data shows that 9 out of 10 people breathe air containing high levels of pollutants in the environment. From smog hanging over cities to smoke inside the home, air pollution poses a major threat to health and climate. The combined effects of ambient (outdoor) and household air pollution cause about seven million premature deaths every year.80% people are affected by its unfortunate consequences, in the form of increased mortality from stroke, heart disease, chronic obstructive pulmonary disease, lung cancer, and acute respiratory infections. More Info

Budget Session Phase 2 Clocks 80% Productivity; Curtailed due to Coronavirus

The Parliament met on 2nd March 2020 for the phase 2 of the budget session after a short break. The Lok Sabha and the Rajya Sabha clocked 86% and 74% productivity respectively until the budget session was called off on March 23, 12 days before schedule due to the growing fears of Coronavirus pandemic.
Complete Coverage: Coronavirus

Crux of the Matter

Complete Coverage: Parliament Budget Session 1st Innings Plays Out With Bouquets And Brickbats

Day 10
On 2nd March, Medical Termination of Pregnancy (Amendment) Bill, 2020 which proposes to increase the time period for termination from 12 to 20 weeks and the Mineral Laws (Amendment) Bill, 2020 which seeks to regulate the mining sector in India was introduced in Lok Sabha as the Budget Session 2.0 began.

Rajya Sabha began discussions on the Direct Tax Vivad se Vishwas Bill, 2020  and the Central Sanskrit Universities Bill, 2019.

Day 11
On March 3, The Banking Regulation Amendment Bill, 2020 was introduced in Lok Sabha. The Bill would keep certain types of agricultural credit societies outside the ambit of the 1949 Banking Regulation Act and strengthen cooperative banks. Clause-by-clause voting on the Direct Tax Vivad se Vishwas Bill, 2020 was taken up in Lok Sabha but the house was adjourned without passage of the bill due to repeated disruptions.

Day 12
On March 4, the Direct Tax Vivad Se Vishwas Bill, 2020 was passed with amendments in the Budget Session. The Indian Institutes of Information Technology Laws (Amendment) Bill, 2020 was also introduced in the Lok Sabha.

The Standing Committee on Finance presented its report on Insolvency and Bankruptcy Code (Second Amendment) Bill 2019 in both the houses. It recommended using the process of delegated legislation through the formulation of rules by the Insolvency and Bankruptcy Board of India.

3 members expressed their dissent for the provision that homebuyers could initiate insolvency proceedings against builders only if the resolution application is jointly filed by at least 10% of homebuyers on the same project.

Day 13
On March 5, Health Minister Dr. Harshvardhan informed both the houses of the government’s steps for universal screening of all international passengers entering India to tackle the Coronavirus. Many MPs highlighted the issue of fake news being circulated over social media and also overpricing of masks and hand sanitizers.

Under Rule 374, the Lok Sabha suspended 7 Congress MPs for the remaining Budget session for their unruly behaviour and misconduct of snatching papers from the Speaker’s table. The 7 MPs are namely Gaurav Gogoi, T N Prathapan, Dean Kuriakose, Manicka Tagore, Rajmohan Unnithan, Benny Behanan and Gurjeet Singh Aujla.

While the BJP welcomed the decision, INC leader Adhir Ranjan Chowdhury alleged the government of revenge politics and termed the decision as ‘dictatorial’.

“Our members had done nothing wrong. The decision was motivated by revenge politics and what happened today is a tale of embarrassment in the history of Parliament.”

Adhir Ranjan Chowdhury, INC Leader

Day 14
On March 6, the Lok Sabha passed the Mineral Laws (Amendment) Bill, 2020 and the Insolvency and Bankruptcy Code (Second Amendment) Bill, 2019 without any discussion.

The Mineral Laws Bill will remove the restrictions for certain coal mines and will further allow the transfer of statutory clearances from previous lessees to successful bidders for two years. The Insolvency and Bankruptcy Code will allow certain financial creditors to initiate an insolvency process in the event of default.

“This Bill will transform the mining sector in the country by boosting coal production and reducing dependence on imports and in turn also promote Ease of Doing Business.”

– Prahlad Joshi, Union Coal & Mines Minister.

Day 15
On 11th March, Minister of External Affairs, Dr. S.Jaishankar addressed the Rajya Sabha over the growing concerns of 6000 Indians stranded in Iran due to Coronavirus. He also informed that the Cabinet Secretary is following up with all states to set up isolation wards.

The Lok Sabha speaker Om Birla reconsidered the decision of the chair and revoked the suspension of the 7 MPs. As the Lok Sabha took up the discussion of the riots in Delhi, fierce disruption was seen from the opposition. AIMIM MP Owaisi, BJP MP Tejasvi Surya put out strong opposing views. Later Home Minister Amit Shah also replied to the debate by stating the facts and figures of the riot and also promised strict and swift action against those behind the riots.

Day 16
On March 12, the Rajya Sabha passed the Insolvency and Bankruptcy Code (Amendment Bill), 2020 but without the incorporation of the Standing Committee recommendations and the Mineral Laws (Amendment) Bill, 2020 was also passed.

In the second half, the government faced a lot of heat from the opposition in the Rajya sabha over the discussion of Delhi Riots wherein the opposition accused the Home Minister of failing to control the riots and also demanded clarification on CAA-NPR-NRC. Replying to the debate, the Home Minister gave point to point reply informing measures taken by the Delhi Police to investigate the riots and also criticized the Shaheen Bagh protest and clarified that no one’s citizenship would be taken away due to CAA or NPR.

Complete Coverage: Chronology of Delhi Riots

The Major Ports Authorities Bill, 2020 was introduced in Lok Sabha; this bill would replace the Major Port Trusts Act, 1963 and set up a Board of Major Port Authority for each Major Port in the country. The Demand for Grants by the Ministry of Railways was also discussed in the Lok Sabha which highlighted the declining business of passenger and freight trains due to other modes of transport.

Day 17
On 15th March, the Lok Sabha passed the Demand for Grants for the Ministry of Railways. The Direct Tax Vivad se Vishwas Bill, 2020 was taken up in Rajya Sabha where the MPs expressed their concerns over not addressing the root causes of high pendency of tax disputes. The House passed the motion to return the bill to the Lok Sabha as it can only send recommendations in case of a money bill.

Day 18
On March 16, the Rajya Sabha gave its assent to the Central Sanskrit Universities Bill, 2019 which will convert Rashtriya Sanskrit Sansthan, Sri Lal Bahadur Shastri Rashtriya Sanskrit Vidyapeetha and Rashtriya Sanskrit Vidyapeetha into Central Sanskrit Universities.

The Standing Committee report on the Cinematograph (Amendment) Bill, 2019 was tabled in Lok Sabha. It seeks to prohibit unauthorized recording and broadcasting of a film and make provision for a prison term of up to 3 years, or a fine of up to Rs.10 lakh.

The Lok Sabha passed the Demand for Grants of Ministry of Social Justice and Empowerment and Ministry of Tourism. The Appropriation Bill, 2020 was introduced by the Finance Minister Nirmala Sitharaman and also subsequently passed.

Day 19
The Companies (Amendment) Bill, 2020 was introduced in Lok Sabha which seeks to decriminalize technical lapses under the 2013 Companies Act. Some Members opposed the bill and demanded to send it to a Standing Committee. This demand was put down by the Minister of State for Finance Anurag Thakur stating that the Bill only covered technical and procedural defaults.

The Lok Sabha then took up the Aircraft (Amendment) Bill, 2020 that proposes to recognize the Directorate General of Civil Aviation (DGCA), the Bureau of Civil Aviation Security (BCAS) and the Aircraft Accidents Investigation Bureau (AAIB) as statutory bodies. One of the MPs asked the Civil Aviation Minister to pass the benefit of low rates of crude oil to aircraft operators; to which Minister Hardeep Singh Puri asked for aviation fuel to be brought under the GST regime.

The Rajya Sabha also took up The National Commission for Indian System of Medicine Bill, 2019 for discussion which aims to repeal the Indian Medicine Central Council Act, 1970 and set up a National Commission for Indian System of Medicine (NCISM). The house also discussed The National Commission for Homoeopathy Bill, 2019 which proposes to set up the National Commission for Homoeopathy(NCH).

Day 20
The Rajya Sabha passed both The National Commission for Indian System of Medicine Bill, 2019 and The National Commission for Homoeopathy Bill, 2019.

In the Zero Hour of Lok Sabha, an MP raised a demand to expand the list of Scheduled Languages to recognize Rajasthani, Bhoti, and Bhojpuri. The Minister of State for Parliamentary Affairs assured that the government is considering this demand to be added to the 8th Schedule.

Day 21
On March 19, the Lok Sabha passed the Institute of Teaching and Research in Ayurveda Bill, 2020 to merge 3 Ayurveda institutes into one which will now be called the Institute of Teaching and Research in Ayurveda and will be designated as an institution of National Importance. Rajya Sabha discussed the Working of the Ministry of MSME; Nitin Gadkari, Minister for MSME said, “the sector contributes 29% of the GDP growth and 33% of manufacturing and has created about 11 crore jobs.”

Day 22
On March 23, The Finance Bill, 2020 was passed in the Lok Sabha and The National Forensic Sciences University Bill, 2020 and the Rashtriya Raksha University Bill, 2020 were introduced.

The house also gave an extension for the submission of the Joint Committee Report on The Personal Data Protection Bill, 2019. In Rajya Sabha, the Pesticide Management Bill, 2020 was introduced. Later, the house took up clause by clause consideration of the Jammu and Kashmir Appropriation Bills for 2020. After growing pressure from the opposition to curtail the ongoing Budget Session, both the Houses were adjourned sine die 12 days ahead of schedule due to the growing cases of coronavirus.

Curiopedia

Zero Hour – The time immediately following the Question Hour has come to be known as “Zero Hour”. It starts at around 12 noon (hence the name) and members can, with prior notice to the Speaker, raise issues of importance during this time. Typically, discussions on important Bills, the Budget, and other issues of national importance take place from 2 p.m. onwards. More Info

Money Bill – In the Westminster system a money bill or supply bill is a bill that solely concerns taxation or government spending as opposed to changes in public law. It can be introduced only in Lok Sabha. The Rajya Sabha may not amend money bills but can recommend amendments. The Speaker of the Lok Sabha certifies the bill as a money bill before sending it to the upper house, and the decision of the Speaker is binding on both the Houses. A money bill must be returned to the Lok Sabha within 14 days, or the bill is deemed be passed in both houses in the form it was originally passed by the Lok Sabha. More Info

Pandemic Profiteering 2020: About US Senators’ Insider Trading & Chaotic Coronavirus Market

The American nonprofit organization ProPublica and US tabloid Daily Beast have reported that members of Congress sold equities after receiving briefings on the Dow Jones (DJIA) stock market dangers of COVID-19, much before the Trump administration announced it publicly. Two Senators, Richard Burr and Kelly Loeffler that came in the red limelight of insider trading, have conveniently denied the allegations.

Crux of the Matter

Public Servants by Day, Perpetrators by Night?
Senator Richard Burr, the chairman of the Senate Intelligence Committee downplayed the financial threat to the American citizens while he was hastily unloading between $628,000 and $1.72m of personal holdings. Next in the row, Senator Kelly Loeffler, wife of New York Stock Exchange’s chairman, sold a substantial amount of stock while buying shares in the teleworking company Citrix.

Public Servants’ ‘Insider Edge’
Insider trading/dealing occurs when someone who has a fiduciary duty to another person, or to an institution, corporation, partnership, firm, or entity, makes a trade of stock based on information that’s not available to the general public. This can directly lead to the former’s unfair gain and the latter’s unfortunate loss. Just like in the aforementioned cases wherein Members of Congress are legally barred from buying and selling based on the information they get in classified briefings.

This practice wasn’t considered illegal at the beginning of the 20th century and a Supreme Court ruling once referred to it as a “perk” of being an executive. A whistleblower, while in conversation with a popular US Daily, once claimed that members of Congress and higher-ups in government jobs were not only trading on inside information they gleaned from their regular assignments, but were also being fed tips from agencies like the Internal Revenue Service on corporate takeovers.

Nonetheless, after feeling the negative shift in public opinion regarding the decade-old deleveraging, the U.S. Securities and Exchange Commission (SEC) became involved and the Securities Exchange Act was passed in 1934. Section 16 of this act requires that when an “insider“, defined as all officers, directors, and 10% owners, buys the corporation’s stock and sells it within six months, all of the profits must go to the company. Additionally, they ought to disclose the changes in the ownership of their positions, including all purchases and dispositions of shares. This aims to remove major trading activities when it’s impossible for insiders to personally gain from small moves.

STOCK v/s Private Moonlighting
The STOCK (Stop Trading on Congressional Knowledge) Act is a law that was passed during the Obama era, in 2012 and it clearly states that members of Congress and other government employees are not allowed to engage in insider trading based on information they learn through their jobs. Even the President, the Vice President, executive branch employees and judges were included in this law, making it a far stricter enforcement from the previous two trading laws.

However in 2013, it did get rid of a provision that the financial disclosures required by the law be posted online on official websites. Burr, who had opposed the bill passed for STOCK, said in his defence to this ongoing pandemic stock market wrongdoings that he relied solely on public news reports. He tried to offer alternate explanations for choosing to make money at a time when he should have been offering Americans the truth.

Can They ever be Tamed? SEC to the Rescue?

Make blind trusts mandatory for Members of Congress to end Congressional Insider Trading once and for all.

– Peter Schweizer, author of Profiles in Corruption: Abuse of Power by America’s Progressive Elite.

The first thing that pops in the mind now is that can these people be trusted to make laws neutrally, if they are financially invested in only the outcome of those laws? Is this simply an invitation for more corruption? After all, unethical behavior becomes especially more unacceptable in the midst of a deadly pandemic like COVID-19 that has infected more than 450,000 and killed more than 20,000 to date.

Can the eagle clear the current mess ?

SEC has officially announced the provision of conditional regulatory relief for certain publicly traded companies. The order, in an effort to address potential compliance issues, gives public companies an additional 45 days to file certain disclosure reports that would otherwise have been due between March 1 and April 30, 2020. Among other conditions, companies must provide a summary of why the relief is needed in their particular circumstances.

Stephanie Avakian and Steven Peikin, co-directors of the SEC’s division of enforcement, have urged public companies to be mindful of their disclosure controls and procedures, insider-trading prohibitions, codes of ethics and Regulation FD. This step has been rightfully taken to prevent improper dissemination and use of material non-public information.

Additionally, whistleblowers, including those who reside outside of the United States, can qualify for financial awards under the Dodd-Frank Act’s whistleblower provisions. In case they qualify SEC’s confidential filing procedures, they can file potential fraud violations to the Commission anonymously via the TCR (“tip, complaint, and referral”) form. They are even eligible for a reward once the SEC issues sanctions based on the whistleblower’s information of $1 million or more. The office says it has paid over $300 million to the anonymous tippers in the past.

Complete coverage of the Global Coronavirus effect

Curiopedia

Stock market refers to the collection of markets and exchanges where regular activities of buying, selling, and issuance of shares of publicly-held companies take place. Such financial activities are conducted through institutionalized formal exchanges or over-the-counter (OTC) marketplaces which operate under a defined set of regulations. There can be multiple stock trading venues in a country or a region which allow transactions in stocks and other forms of securities. The leading stock exchanges in the U.S. include the New York Stock Exchange (NYSE), Nasdaq, and the Chicago Board Options Exchange (CBOE). These leading national exchanges, along with several other exchanges operating in the country, form the stock market of the U.S. More Info

The Dow Jones Industrial Average (DJIA), is a stock market index that measures the stock performance of 30 large companies listed on stock exchanges in the United States. The value of the index is the sum of the price of one share of stock for each component company divided by a factor which changes whenever one of the component stocks has a stock split or stock dividend, so as to generate a consistent value for the index. Investing in the DJIA is possible via index funds as well as via derivatives such as option contracts and futures contracts. More Info

India Under 3 Week Lockdown to Curb Exponential Explosion of COVID-19

On 24th March 2020, Prime Minister Narendra Modi announced an unprecedented complete lockdown of India for 21 days to mitigate the spread of the worldwide pandemic, coronavirus. The world has seen more than 4 lakh cases in the first quarter of 2020, while India has seen over 600 cases.

Crux of the Matter

India saw its first Coronavirus case on 30th Jan 2020. The case count touched 100 after 44 days, after which the cases have doubled roughly every 4-5 days. As of 25th March the case count has crossed 600 with 11 deaths, 55 days after the first case.

This exponential rise in cases has caused a sense of panic among the people. So far the world has seen over 4 lakh cases and around 20,000 deaths. The virus which originated in China in November 2019, has travelled across the Silk Route, wreaking havoc in Italy, Spain, UK and the rest of Europe along with Iran. It has now spread in the USA and India, and has also affected China’s neighbours such as South Korea and Japan. In a massively globalised world, a virulently contagious disease is spreading like wild fire. Countries across the world including China, Italy and Spain, the 3 worst hit countries in terms of death toll, have resorted to locking down affected areas to contain the spread of the virus.

Summachar’s Complete Coverage of Coronavirus

PM’s Appeal
Although India hasn’t seen nearly as many cases as Europe, China or USA, given the country’s size and population density, Coronavirus poses a very potent threat to this country.

To stop the spread in its tracks, the Prime Minister has decided to implement a nation wide lock down of 3 weeks starting from 25th March. PM Modi made a special televised address on 24th March, and conveyed the seriousness of the situation in simple terms. He requested the citizens to stand together with discipline against this potential calamity.

Earlier on 22nd March Modi had announced a Junta Curfew, a self imposed curfew by the citizenry, which was observed by most of the country. Since then, different states had started announcing various lockdown measures till the end of March. Since the Junta Curfew day, streets across India have become empty with people staying locked up in their homes.

Press Information Bureau – PM calls for complete lockdown of entire nation for 21 days

How will we lock down?
In the upcoming weeks, all non-essential places of business will be closed. Police forces have been mandated to ensure that people stay at home. The government has promised the citizens that it will try to reduce the inconveniences of the general population while taking specific steps to combat the spread of coronavirus. PM Modi has already announced a Rs 15,000 crore package for strengthening the medical infrastructure of the country while the FM has announced a slew of relief measures to ease the fiscal burden on the working class.

To make the lockdown manageable, essential services such as groceries, medical stores, hospitals, police stations, fire stations, etc will stay open. Government will function with reduced capacity of work force. The government will not be cutting wages of its employees and has appealed to private business owners to follow suit. By and large, the prime minister’s appeal has been met with support by the populace as well as the industry.

Press Information Bureau – Government of India issues Orders prescribing lockdown for containment of COVID-19 Epidemic in the country

Exponential Explosion
At present, no vaccine or medicine has been confirmed as an antidote for the virus, although certain malaria and HIV medications have worked in treating some patients. Currently, the overall fatality rate across the world lies at 4% on the optimistic side. In cases that have been closed (i.e. the cases whose outcome has been determined), the worldwide fatality rate is currently 15%. Italy, the worst hit country so far, has a closed case fatality rate of 45% and overall fatality rate of 10%. (Here overall fatality rate is the total percentage of active and closed cases that resulted in deaths.)

The virus is transmittable across humans and is as contagious as flu. Every new patient increases the chance of spread. Also the symptoms stay dormant for 1-2 weeks, which means that an affected person may spread it without knowing about it. All of this increases the probability of transmission. The contagiousness of the disease makes it spread exponentially – assume 1 person transmits to 2 people, those 2 can transmit to 4, 4 to 8, 8 to 16 and so on and so forth. Given the asymptomatic first week, every carrier can transmit to many more people which would just increase the rate of spread.

This can be seen in the case data as well. It took 87 days to spread to the first 50,000 people. It doubled to 100,000 in another 23 days, then 200,000 in another 12 days and 400,000 in another 6 days. After the first 50,000 cases (which were mostly in China) once it spread out, the cases have doubled in half the time for every doubling event. This kind of exponential explosion can be curbed by pre-emptively restricting the interaction of humans – and hence, governments across the world are resorting to nation-wide lockdowns.

Curiopedia

Exponential growth is a specific way that a quantity may increase over time. It occurs when the instantaneous rate of change of a quantity with respect to time is proportional to the quantity itself. In the long run, exponential growth of any kind will overtake linear growth of any kind. A virus (for example SARS, or smallpox) typically will spread exponentially at first, if no artificial immunization is available. Each infected person can infect multiple new people. More Info

Understanding Recessions even as the Globe Locks Down

The collapse of economic activities due to the coronavirus and its subsequent impacts is reportedly leading towards a worldwide recession. But what exactly is a recession? What is an economic slowdown? Can a virus cause a recession?

Crux of the Matter

The state of the world economy is highly uncertain across the world with national health emergencies being declared due to the outbreak of the China-originated Coronavirus. The share markets are plunging down to record lows; central banks are issuing interest cuts and trying to understand the impact of this pandemic to try to safeguard their economies from a recession.

Read Summachar’s complete coverage on impact of Coronavirus

There is a lot still unknown about the coronavirus and amidst this, the world economies are deteriorating which is making it difficult for businesses to sustain in the volatile market conditions. The virus has not spared any sector; it has already resulted in losses of more than $150 billion in sectors like tourism, airlines and hotel industry.

What is Recession and What Causes It?
A recession can be defined as two back-to-back quarters of negative economic growth which is measured by gross domestic product (GDP).

Real changes and structural shifts are major causes of economic recessions. It may include a sudden rise in oil prices due to a geopolitical crisis. There are different prevalent theories which try to explain causes using monetary factors. Financial factors like overexpansion of credit and financial risk during the good economic times preceding the recession can also lead to recession.

One of the major reason for any economic slowdown is inflation which is defined as a rise in the prices of goods and services over a period of time. The higher the rate of inflation means that a consumer will be able to purchase a lesser quantity of goods with the same amount of money as before.

In such a complex environment businesses are forced to cut down on expenditures which may result in decline of GDP and laying off workers to manage costs. Lay-offs would lead to increasing unemployment which could reduce the purchasing power and hence demand in society. This could lead to a vicious downward spiral. All these combined factors may lead the country into a period of recession.

In the current scenario, there is already an ongoing tussle between Saudi Arabia and Russia over oil production which has led to sharp decline in crude oil prices. Further coronavirus is leading to lockdowns across the world with direct negative impact on industrial productivity of most countries. Global markets have been crashing since last month. Investors are not sure of a global slowdown yet but they seem to be preparing for it seeing the global conditions.

Types of Recession
V-shaped recession indicates that the economy suffers a sharp economic decline, but recovers quickly and strongly. It can happen due to increased consumer demand leading to a significant rise in economic activities. Example for such a recession is the 1950s American economy decline which recovered after 12 months.

L-shaped refers to an economic recession where the recovery is characterized by a steep decline in economic growth followed by a slow recovery. It is the most dramatic type of recession and its recovery can take a long time. Such a recovery period can also be called a depression. Example of such a type is the 2008 financial crisis.

Apart from these 2, Economists also categorise recessions as U-shaped, W-shaped depending on the recovery patterns.

History of Recessions
Credit Crisis of 1772
In London, after a period of rapid expansion of credit, Alexander Fordyce, a partner in a large bank, lost a huge sum shorting shares of the East India Company and he fled to France to avoid repayment. It led to more than 20 large banking houses going nearly bankrupt. The crisis also then spread to Europe.

Stock Crash of 1929
On October 24, 1929, share prices collapsed due to drastic oversupply of commodity crops and drought eventually leading to the Great Depression. It is the most severe economic depression which resulted in loss of 90% of stock market value and failing of 11,000 banks. More details in Curiopedia section below.

OPEC Oil Crisis
In October 1973, OPEC members launched an oil embargo targeting countries that backed Israel in the Yom Kippur War and at the end of it, a barrel of oil rose from $3 to $12. Since modern economies depend on oil, the higher prices and uncertainty led to a major stock market crash with the Dow Jones Industrial Average losing 45% of its value.

Asian Crisis of 1997–1998 
After the collapse of the Thai baht in July 1997 there was a crisis of foreign currency and the Thai government was forced to abandon its U.S. dollar peg and let the baht float. This resulted in huge devaluation that spread to much of East Asia and increasing debt-to-GDP ratios.

The 2007-2008 Global Financial Crisis
This was the biggest financial crisis after the Great Depression of 1929. It began with a lending crisis in 2007 which later expanded into a global banking crisis with the failure of Lehman Brothers in September 2008. Huge bailouts and other measures to control the damage failed and the global economy fell into recession as many economists had suggested.

I see more than a 50% chance of the United States going into a recession.

– Alan Greenspan, Former Federal Reserve Chairman (6th April 2008)

On 29 April 2008, Moody’s declared that nine US states were in a recession. In 2008, an estimated 2.6 million U.S. jobs were eliminated and the unemployment rate in the U.S. grew to 8.5% in March 2009. This number reached 5.1 million by March 2009.

The impact in the US was so devastating that it led to 8 million home foreclosures, S&P 500 declined 38.5% in 2008, $7.4  trillion loss in stock wealth which is approximately $66,200 per household and price of the houses dropped by 40%.

In this period the private consumption fell for the first time in nearly 20 years. The depth and severity of the recession were very high. With the consumer confidence being extremely low, the economic recovery took a long time.

Looking Ahead
It is very clear that seeing the ongoing global developments right from coronavirus to oil crisis there is a huge threat looming over the global economy in the coming months. The small businesses are going to be the most impacted with millions of people expected to lose their jobs. In this current scenario of uncertainty, it is now important to think of possible scenarios like what if the virus spreads more broadly with a higher mortality rate or if the outbreak continues in the next year as well then the economic impacts would be much more than anyone would have thought of. The severity of impacts would solely depend on the length and seriousness of the pandemic. It is the need of the hour to study the past data while keeping a close watch on current situations and strategically prepare for tough times ahead.

Curiopedia

The Great Depression was a severe worldwide economic depression across nations; in most countries, it started in 1929 and lasted until the late 1930s. It was the longest, deepest, and most widespread depression of the 20th century. The Great Depression is commonly used as an example of how intensely the world’s economy can decline. It started in the United States after a major fall in stock prices that began around September 4, 1929, and became worldwide news with the stock market crash of October 29, 1929, (known as Black Tuesday). Between 1929 and 1932, worldwide GDP fell by an estimated 15%. By comparison, worldwide GDP fell by less than 1% from 2008 to 2009 during the Great Recession. Personal income, tax revenue, profits and prices dropped, while international trade fell by more than 50%. Unemployment in the U.S. rose to 23% and in some countries rose as high as 33%. More Info