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Economy

Beyond GDP: The economy of well-being

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Beyond GDP: The economy of well-being

Altaf Hussain Haji

All of us have heard about the term ‘standard of living which means all the elements in someone’s life that contribute to their happiness.   Standard of living is a broad term that encompasses many factors including some that are not bought and sold in the market.  The standard of living is an economic opportunity that focuses on basic material factors such as income, gross domestic product (GDP), life expectancy, etc.  It is closely related to the quality of life, which can also explore factors such as economic and political stability, political and religious freedom, environmental quality, climate, and safety. In the present scenario, economic growth is commonly taken to mean a sustained increase in real GDP per capita and somehow linked with social, economic, and environmental growth. There are a lot of challenges today regarding growth and standard of living.

To solve the social, economic, and environmental challenges faced today by governments and other institutions around the world that need to embrace new ways of thinking and actively engage in widespread systems innovation to make real progress toward a healthier and more prosperous life.

The economy of well-being highlights the need for putting people at the centre of policy. It is important to move away from an attitude of “grow first, redistribute and clean up later”, towards a growth model that is equitable and sustainable from the outset.

The well-being economy encompasses a diverse array of ideas and actions aimed at advancing social well-being through governance structures that support peaceful co-existence and meet basic human needs. A well-being economy provides people with equal opportunities for advancement, a sense of social inclusion, and stability—all of which contribute to human resilience and, importantly, sustains and supports harmony with the natural world. It aims to serve people and communities first and foremost and offers a promising path toward greater social well-being and environmental health. The current economic system s become addicted to “growth at all costs”, as measured by Gross Domestic Product (GDP) but ignores the wellbeing of the individuals at all levels of development. Instead, we need an economic system that takes a preventive approach to social and environmental challenges to ensure that the kinds of related, follow-on problems of the standard of living or a person’s happiness.

The level of GDP per capita, for instance, captures some of what we mean by the term standard of living, as illustrated by the fact that most of the migration in the world involves people who are moving from countries with relatively low GDP per capita to countries with relatively high GDP per capita.

The GDP is a limited tool for measuring the standard of living because many factors that contribute to people’s happiness are not bought and sold. The GDP includes what is spent on environmental protection, healthcare, and education, but it does not include actual levels of environmental cleanliness, health, and learning. GDP includes the cost of buying pollution-control equipment, but it does not address whether the air and water are cleaner or dirtier. GDP includes spending on medical care, but it does not address whether life expectancy or infant mortality have risen or fallen. Similarly, GDP counts spending on education, but it does not address directly how much of the population can read, write, or do basic mathematics.

The OECD is one such organization, which has been working on the measurement of well-being beyond GDP since the 1970s and has seen the concept of well-being develop from an interesting side-note into a well-established agenda for policy. As we know that the Organization for Economic Cooperation and Development (OECD) is an international organization that works to build better policies for better lives.  The main goal is to shape policies that foster prosperity, equality, opportunity and well-being for all at the international level. The OECD’s Well-Being Framework has further developed the concept by providing us with a clear definition and rigorous analytical basis. The Framework for Policy Action on Inclusive Growth has helped identify the channels through which governments can promote greater well-being and sustainable economic growth for all their citizens.

The economy of well-being highlights the need for putting people at the centre of policy. It is important to move away from an attitude of “grow first, redistribute and clean up later”, towards a growth model that is equitable and sustainable from the outset.

An economy of well-being has four main pillars. The first pillar is education and skills. Skills are the most important driver of long-term economic growth. The policy can help leverage the benefits of education. For example, higher attendance in pre-primary education, greater autonomy of schools, reduced gaps between academic and vocational branches of education and higher funding for tertiary education can all boost human capital, while also improving the efficiency of education systems. At the same time reducing inequalities of access and opportunity at school is essential to promote better educational outcomes, as countries with high levels of inequality in education and skills also record lower average educational performance.

The second pillar is health. Evidence shows that good health fuels economic growth, productivity and individual earnings. Good health is also a key factor for people’s well-being. It allows them to invest in education and skills, access quality jobs and enjoy a better quality of life.   It has seen that increased spending has driven much of the improvement in health outcomes, but we need to go beyond. This means looking at the range of services covered by primary healthcare, as well as addressing new or persistent risk factors. Reducing inequalities of access is also essential to promote better health outcomes, as the proportion of people in poor health weighs heavily on key health indicators. Moreover, health inequalities are often stratified along economic, educational or occupational lines. For instance, unmet care needs are substantially higher for low-income groups.

The third pillar is social protection and redistribution. Both play an important role in reducing economic volatility and fostering resilience. They also prevent inequality today from translating into inequality of opportunities for the next generation. Recent OECD research confirms that lower inequality is associated with higher GDP growth.  Combining income-support schemes with active labour market policies provides effective protection and supports employment. Promoting more progressive tax and benefit systems can help countries promote equality of opportunity and social mobility. Social protection systems also need to adapt to a changing world of work, notably by improving coverage for non-standard workers, and to evolving social risks, notably the increasing prevalence of lone-parents and frail elderly.

The fourth pillar is gender equality. Raising women’s employment and hours worked can deliver productivity gains and higher GDP growth. It can also reduce income inequality, strengthen resilience and consolidate the middle class.

There are many other dimensions to an economy of well-being, for instance, the quality of housing and infrastructures, as well as the equitable access to those; and of course the quality of the environment that significantly affects health outcomes, especially among the poorest.

The fact that GDP per capita does not fully capture the broader idea of the standard of living has led to a concern that the increase in GDP over time is illusionary. It is theoretically possible that while GDP is rising, the standard of living could be falling if human health, environmental cleanliness, and other factors that are not included in GDP are worsening. Fortunately, this fear appears to be overstated.

Since 1970, the air and water in the United States have generally been getting cleaner. New technologies have been developed for entertainment, travel, information, and health. A much wider variety of basic products like food and clothing is available today than several decades ago. GDP does not capture leisure, health, a cleaner environment, the possibilities created by new technology, or an increase in variety. Ignoring these factors, GDP would tend to overstate the true rise in the standard of living.

At the last to mention here, that during COVID19 pandemic in the whole world regarding health and well-being. The pandemic affects badly the standard of living due to the poor health system at every level and is continued to create many hurdles in the processes of wellbeing. It is difficult to maintain a healthy lifestyle when we are in the middle of a crisis like this. The uncertainty and worries related to finances, childcare, elderly parents, and job security disrupt our routines, our lifestyles and mental health. The uncertainty about the future, the ceaseless news coverage and a constant social media-driven flood of messages can increase our sense of anxiety. It is also important to maintain a healthy lifestyle and get back into a routine at this movement. This also showed how important is wellbeing as compared to gross domestic product nowadays.

Altaf Hussain Haji, ISS, is Deputy Director General National Statistical Office, Shimla. He can be contacted at [email protected]

Economy

Wood shortage, high prices due to Russia-Ukraine war affect timber business in Kashmir

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Wood Shortage high prices

Malik Nisar

Srinagar: Every summer Altaf Ahmad 35, a small timber trader from north Kashmir Baramulla district used to be busy with his timber business, but this year instead of attending to customers at his unit, Altaf spends his day playing cricket in his village outskirts. The war in far-off lands has affected his business badly.

The prices of KD Wood mostly imported from Russia and Ukraine have soared many times, while the supply had dwindled.

“The Russia-Ukraine war has badly hit our timber business in Kashmir. This is the construction season here, we were expecting our business will double as there was lockdown from the past two seasons because of Covid19, but due to the war we are on the verge of complete breakdown this season too,” said Altaf Ahmad.

Altaf believes that their business is at a halt not only because of less supply of timber but also due to the less demand due to price rises as customers are reluctant to purchase at higher rates.

“There is the increase of 20% to 50% in the rates that has abruptly brought down the demand because customers are unable to purchase on such higher rates. We used to earn a good profit, but are presently on destruction mode where survival seems very much difficult,” said Altaf

Russia is one of the highest timber suppliers in the world and ranks as the seventh biggest exporter of forest products worldwide, which accounts for 22% of the global trade. And it clearly shows that the global market will continuously impact as long the Russia-Ukraine war continues. A country like China, which is in support of Russia in the conflict, has also been affected by limited trade sanctions as it depends on the import of timber, logs, and wood chips even for their domestic use.

Halted construction work

For Sajad, who was planning to complete the pending works of his newly built house and get married next year, the Russia- Ukraine conflict has brought a tsunami of hopelessness because the sudden surge in the timber rates has halted his plans of construction work and marriage back home, he feels it is unbearable to bear all the expenses in such a tough situation where other commodities all already in the surge.

Wood Shortage high prices

“The sudden increase in timber rates halted all my construction works because, I was expected to purchase timber say for example for Rs 1 lakh, now it will cost me Rs 1.5 lakhs an increase of fifty thousand. Now, I am too confused about whether to do it or not,” said Sajad Ahmad from the Bemina area of Srinagar.

 Showkat Ahmad another timber trader from North Kashmir says Ukraine timber was mostly used in Kashmir for the past couple of years as compared to Russian and German timber because Ukraine timber was available at cheaper rates. With a war going on in Ukraine the demand for German and Russia will arise, but it’s going very much costlier for customers.

“People prefer Ukraine timber because it’s easily affordable for them in contrast with German and Russian timber due to its low cost. The war in Ukraine has put everyone both (buyer and seller) in a catch22 situation because one doesn’t know what’s going to happen next,” says Showkat Ahmad who deals with the timber business for the past decade.

Business Kashmir visited various units in central and north Kashmir among them was Changa Timber Gallery, Sopore.

“I am into this business for the last one year but, I think this kind of situation will only benefit those dealers who have piles of stock available in the stores because they can increase rates on that stock which they have purchased at low rates earlier and a trader like me will go more into loss due to these unprecedented rates who’s new into this business and has very much less stock available at times,” says Aijaz Ahmad Changa, a 30-year-old BCom graduate.

Kashmiri Timber Traders mostly purchase timber from Gujarat and in Gujarat, they directly import the timber from Russia, Ukraine, and Germany. Business Kashmir contacted Singla Timbers Private Limited one of the oldest timber factories in Mithirhar, Gandhidham Gujarat who are in this business since 1946.

“The whole world is witnessing inflation it will remain for some time maybe for another year and there is also less supply of timber from the last few months because of that we are witnessing an increase in the rates of timber,” says Pulkit Singla director Singla Timbers.

“Kashmiri traders prefer Ukraine timber because of low price, but at the same time Ukraine timber also differs in quality in comparison to others.”

He says the lack of local wood production forces people to buy imported wood.

“India only imports 2% of the world produced timber. The local timber in India is not of that quality and one has gone through a long process before getting its access. The forests are like agricultural fields for countries like Russia and Ukraine, they cut the trees and do the plantation of it again and again but, in India, that thing is lacking. It’s also because of the weather,” he said.

Altaf and other timber traders in Kashmir are now waiting and praying for the end of the war in Ukraine so that their business will see that charm again.

“I only want the war in Ukraine to end, so that our miseries will also end,” concluded Altaf.

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Economy

Omicron, economy and budget deficits

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Omicron economy budget deficits

Dr BinishQadri

The World Health Organization on November 26, 2021, labelled variant B.1.1.529 a variant of great alarm, named Omicron, on the advice of WHO’s Technical Advisory on Virus Evolution (TAG-VE). Extensive evidence was presented to this advisory that Omicron has several mutations affecting its behaviour.

Research is coming up at different levels to get hold of different aspects of Omicron in a better way.  There is much ambiguity about whether there is more transmission in Omicron as compared to other variants, including the Delta variant. South Africa has seen the number of people testing positive increasing as a result of this variant. Many epidemiologic studies are in progress that aims at knowing if the positive cases are rising because of Omicron or some other factors.

One of the biggest aims of economies is resource allocation involving a balance between our priorities and competing needs so as to get the most suitable economic action. Any fiscal policy demands a judicious attitude in pursuing the goal of resource allocation and distribution. Fiscal discipline should reduce fluctuations in income, output, and employment.

Whether it is omicron or anything else the fact is that all facets of the current pandemic have in one way or the other way affected economies of the world in general and underdeveloped in particular. It is very important to correct all economic and social odds.

Fiscal indiscipline is an important characteristic related to all shocks of all times and COVID19 is no exception. Fiscal indiscipline implies that our governments are not maintaining good fiscal positions that coincide with macroeconomic stability and economic growth that is all-inclusive and sustained. Borrowing in large numbers and amassing debt like anything are enemies of every economy. The dual actions are responsible for the creation of fiscal crunches. To achieve the target of Fiscal discipline it is necessary for governments to maintain fiscal positions that are consistent with macroeconomic stability and economic growth that is sustained by letter and spirit. In order to create and maintain fiscal etiquette, there should be an avoidance of debt accumulation and excessive borrowing.

One of the biggest aims of economies is resource allocation involving a balance between our priorities and competing needs so as to get the most suitable economic action. Any fiscal policy demands a judicious attitude in pursuing the goal of resource allocation and distribution. Fiscal discipline should reduce fluctuations in income, output, and employment. COVID19 and all its variants no doubt have generated fiscal indiscipline which is why all governments should be prudent to create ‘‘budgetary beanbags’’ to combat all shocks and disturbances and to deal with anticipated economic and fiscal burdens.

Economists surveyed by Reuters argue that economies should emphasize fiscal judiciousness as there is a declining trend in the Indian economy. Lead Economist at Emkay Global Financial Services, Madhavi Arora argues that Omicron and the allied bad repercussions have a short end and is in no way a long-lasting wave.

A fiscal deficit connotes a gap in a government’s income compared with its spending thereby meaning that there is a fiscal dearth in the government spending beyond its means. There is a dip in the fiscal deficit from 135.1% in the April-November period of the previous financial year to 46.2% in the current financial year. There is a need for fiscal consolidation and all the fiscal policies carried out by the government at all levels must aim at reducing their deficits and debt stock build-up.

In order to understand Omicron and its impact on the Indian economy and other emerging markets, planners need to Google and start thinking about consolidating their budget deficits post COVID19 years. They need to include a series of fiscal responsibility laws, fiscal guidelines, and fiscal assistance (dynamic organizations in particular).

The strategy and implementation policy, alongside economic (fiscal) and political commitment are necessary and sufficient conditions for the effective strengthening of fiscal discipline during shocks.

Dr Binish Qadri is an assistant professor at the Department of Economics, University of Kashmir. You can reach her at [email protected]

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Economy

UAE delegation announces establishment of Kashmir Business Centre in Dubai: KCCI

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Kashmir Business Centre in Dubai

Malik Nisar

Srinagar: To facilitate J&K-based startups and entrepreneurs in Gulf countries for opening their operations, the UAE-based visiting business delegation has announced to open Kashmir Business Centre in Dubai, Kashmir Chamber of Commerce and Industries (KCCI) said in a press conference on Tuesday.

A 30-member UAE business delegation is on a four-day official visit to Jammu and Kashmir to explore the investment opportunities in the region.
President, KCCI, Sheikh Ashiq said during an interaction meeting with the local business community, the UAE-based delegation announced that a Kashmir Business Centre will be set up in Dubai for providing support to J&K-based entrepreneurs and connecting them to the relevant people there.
Ashiq said, KCCI not only welcomes the announcement but with the consent of the government will try its best that it materialises. He said the centre will also prove fruitful for a large number of youth, who go there in search of jobs.
Secretary General of KCCI, Farooq Amin, added that the business centre will provide an opportunity to young entrepreneurs who want to explore their new ideas but do not find them viable here. He said these new entrepreneurs will get the chance to explore their innovative ideas in the global market. The business centre will be more kind of an incubation facility, he added.
Amin said some of these youngsters have already presented their business ideas in the meeting and received applause from the UAE delegation. They will now directly contact these young entrepreneurs and will invest in their business.
Sheikh Ashiq said they are also mulling to send a J&K business delegation comprising of all the sectors to UAE for exploring the market for various kinds of produce and handicrafts there.
While welcoming the delegation for their investment proposals in J&K, KCCI hoped that local businessmen will be also included in their plans.
Ashiq said the delegation will also prove beneficial for the tourism promotion of the region as they will spread the word about the beauty and culture of Kashmir.
“We also told them that we need more international connectivity and we want global market should open for our people. Through these initiatives the unemployment rate can be brought down,” Ashiq said.

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