New calculator developed to measure Covid-19’s economic impact; $10.9 billion loss recorded in 4 South states

Researchers from India, in collaboration with UK, developed an innovative calculator to capture the economic loss due to Covid-19.

ByChetana Belagere

Published Dec 01, 2023 | 9:00 AMUpdated Dec 09, 2023 | 10:31 AM

New calculator developed to measure Covid-19’s economic impact; $10.9 billion loss recorded in 4 South states

An estimated combined economic loss of approximately $10.9 billion was observed during and after Covid-19 across just four southern states — Karnataka, Kerala, Andhra Pradesh, and Telangana — as per an innovative online calculator.

No, it isn’t some ordinary calculator. This calculator was developed by Indian researchers in collaboration with the University College of London.

Crafted to assess the economic impact of Covid-19 across all states of India, this tool is a joint effort by MS Ramaiah University of Applied Sciences (Bengaluru), Centre for Public Health Research (Kolkata), Great Lakes Institute of Management (Chennai), Amrita Institute of Medical Sciences (Kochi), and University College London.

It focuses on the non-health components of the Gross Domestic Product (NHGDP) in the states of India.

The economic impact of Covid-19

Published in the journal BMJ Open, the research showcases the calculator’s utility in measuring the pandemic’s economic consequences beyond healthcare costs, focusing on the NHGDP. The NHGDP represents the part of the economy affected by consumer and business activities, excluding direct healthcare expenses.

The study looked into the extensive economic impact of Covid-19 on West Bengal, highlighting significant losses in the state’s NHGDP. Conducted using a variety of open sources for data collection, the research meticulously analysed Covid-19 deaths in the state to understand the pandemic’s broader economic repercussions.

Employing a cost-of-illness approach, the study estimated future NHGDP losses, a method that evaluates the financial burden of diseases, factoring in productivity losses, and indirect costs related to illnesses and deaths.

Using this calculator that was developed to find out the NHGDP loss for West Bengal, the economic loss for all states across India can be predicted.

Speaking to South First, lead author Denny John, Professor in Public Health at MS Ramaiah University of Applied Sciences in Bengaluru, says, “In layman’s terms, the calculator estimates how much money is lost when people die from Covid-19, not just through healthcare costs but also by considering the decrease in spending and work productivity. Deaths, especially in working-age groups, mean less spending and productivity, which affects businesses and the overall economy.”

Also read: Is the surge in conjunctivitis cases due to new Covid-19 strain? 

Understanding the calculator’s role

The study introduces a novel approach to evaluating the pandemic’s economic repercussions. Traditional assessments often focus on direct health-related expenditures. However, this calculator expands the scope to include the indirect impact on NHGDP, a crucial but less explored aspect of the economy that encompasses consumer and business activities outside of healthcare expenses.

According to John, the direct healthcare costs include hospitalisation, medical treatments, pharmaceutical expenses, and public health interventions. They primarily quantify the strain on healthcare systems and the direct financial burden on governments and healthcare providers.

The calculator expands the economic assessment to include the impact on non-health components of the economy that are not directly related to healthcare. This includes consumer spending, business investments, production output, and overall economic activities that drive the state and national economies.

The tool takes into account the economic losses that are not immediately apparent. This includes the reduction in consumer spending and business activities due to Covid-19 fatalities.

The death of individuals, particularly in economically productive age groups (like 46-60 years), means a decrease in the workforce, which in turn leads to lower productivity and spending. For example, when individuals in these age groups pass away, they are no longer contributing to the economy through their work or consumption, which can have a ripple effect on various sectors of the economy.

By considering these indirect economic impacts, the calculator provides a more comprehensive view of the pandemic’s overall economic toll. It recognises that the effects of Covid-19 extend far beyond the direct healthcare-related expenses.

“Revelations made by this calculator can help in policymaking in each state of the country,” says Prof John.

Also read: 12 key symptoms commonly associated with long Covid-19

A look at the losses in 4 southern states

Karnataka

In Karnataka, the calculator estimates a future NHGDP loss of $2.9 billion due to 40,315 deaths between March 2020 and November 2023. This figure accounts for approximately 0.4 percent of the state’s domestic product (SDP). However, when considering global excess death data, the estimated loss increases to between 2.4 percent and 2.8 percent of Karnataka’s SDP.

Prof John explains, “As per publicly available information, Karnataka recorded 40,315 deaths between 1 March, 2020, to 2 November, 2023. Our calculator reports that due to these deaths, the future NHGDP loss for Karnataka is $2.9 billion, with a majority of this loss due to deaths in the 46-60 years age group.”

In layman’s terms, this is a significant amount of money that the state’s economy did not generate because of the pandemic. It reflects a considerable gap in economic activity, affecting various sectors and potentially leading to reduced business investments, lower consumer spending, and a general slowdown in economic growth.

The loss accounting for approximately 0.4 percent of Karnataka’s State Domestic Product might seem small in terms of percentage, but it’s substantial when considering the size of the state’s economy.

The expanded estimate, ranging from 2.4 percent to 2.8 percent of Karnataka’s SDP when considering global excess death data, suggests a far more significant economic impact. This indicates that the indirect effects of the pandemic, including deaths that are over and above the normal rates (excess deaths), have a profound and extensive impact on the economy.

Kerala

Kerala’s situation is even more stark. The tool projects a $6.9 billion NHGDP loss owing to 71,123 deaths, representing about 1.79 percent of Kerala’s SDP. This percentage significantly escalates to between 2.9 percent and 3.3 percent with the inclusion of broader mortality data.

This increase indicates that the actual economic impact of Covid-19 on Kerala is potentially much larger and more damaging than initially estimated, affecting a significant portion of the state’s economic activities.

Results from the study suggest that Covid-19 contributed to a major economic loss in Kerala. The mortality and morbidity caused by Covid-19, the substantial economic costs at individual and population levels in Kerala is another economic argument for better infection control strategies across the globe to minimise the impact of Covid-19 and future pandemics.

Andhra Pradesh

Meanwhile, for Andhra Pradesh, the calculator indicates an NHGDP loss of $0.8 billion due to 14,733 deaths, constituting 0.16 percent of the state’s SDP. This loss percentage increases to between 2 percent and 3.5 percent when additional death data is considered.

Telangana

Telangana, with 4,111 recorded deaths, faces an estimated NHGDP loss of $0.3 billion, which is about 0.06 percent of the state’s SDP. This figure rises to between 0.86 percent and 1 percent with the inclusion of excess death data.

Also read: WHO declares that Covid-19 is no longer a global health emergency

Implications and future applications

The research, according to the study, provides crucial insights for public health planning and economic policy-making. By highlighting the indirect economic impacts of the pandemic, the calculator serves as a crucial tool for understanding the full extent of Covid-19’s economic damage.

According to Dr Paramita Bhattacharya from the Centre for Public Health Research, Kolkata, “The findings from the study and calculator provides food for thought for the financial and health sectors of the economies to re-evaluate the established priorities in order to guarantee long-term gains in economic performance.”

This tool’s significance extends beyond immediate policy responses to the pandemic. It offers a framework for assessing the economic impact of future health crises, potentially guiding governments and health organisations in more effectively allocating resources and planning for economic recovery.

The online calculator is now accessible to public health officials, researchers, and policymakers at https://covidnonhealthgdp.cphr-mant.org/