So the new alternative or strategy can be keeping the state’s strong and free of any saffronization. However, the current situation of Maharashtra sinks the heart of all Indian citizens who fear the steady decline of democratic ideals in the country. If states keep falling prey to BJP’s grand plan, very soon we will end up becoming a one-party state like China and we all know what it entails. We have to keep the fear of losing alive in the BJP camp. As we saw in the case of Bengal elections last year, almost all top brass leaders of BJP visited the state during the campaigning phase. This is because they were and are wary about AITC and its leader Ms. Mamata Banerjee. Unfortunately, we did not see similar efforts on the part of now ex-CM of Maharashtra, Uddhav Thackeray. All the responsibility of horse-trading and setting up of the new government was left on the shoulder on Devendra Fadnavis without any of the top leaders. Winning an important state like Maharashtra is definitely a feather on the cap of the ruling party. As more and more states succumb under the pressure of the ruling junta, it goes without saying that we will not see India’s rank improve in any of the democracy indices. Given the current scenario in the country, BJP should not get a clean sway in any of the legislative elections coming up in 2023. In 2023 Rajasthan, Chattisgarh, Telengana and Mizoram are scheduled to go for their assembly elections. These 4 states are at present non-BJP states. In the run-up to the 2023 assembly elections, it will be interesting to see what ploy is used by the ruling party to swing the political pendulum and the test for the states will be to hold their grounds strong.

Reference:
Maerz, Seraphine, Anna Luhrmann, Sebastian Hellmeier, Sandra Grahn and Staffan Lindberg (2020) “State of the World 2019: autocratization surges – resistance grows”; Democratization, Vol. 27, Issue 6, pp. 909-927.

The article is written by Prof. Swetasree Ghosh Roy, Professor, Jindal School of Government and Public Policy.

We all know life is too short to stress ourselves over anything but still, we often experience stress. Why? Maybe because of our evolved emotional brains. Or maybe because of our personality. Or maybe due to some external unavoidable factors. Or we do not know how to handle our emotions. The answer can be many or any. If emotion-inducing stressful situations are an inevitable part of our life, then what do we have in our hands? The answer is its regulation.  

Emotions and Their Significance 

To understand emotion regulation, let us explain the meaning of emotions first. The term ‘emotion’ is difficult to define as it has been taken from an everyday discourse of people (Suri, Sheppes, & Gross, 2013). According to the dictionary of APA (American Psychological Association), emotions can be defined as, “a complex reaction pattern, involving experiential, behavioral, and physiological elements, by which an individual attempts to deal with a personally significant matter or event.” Thus, emotions consist of three key parts: one’s subjective experience of emotion, the physiological response of emotions, and behavioral response of emotions. 

Gross and Thompson (2007); the famous scholars in the field of psychology of emotions, also described three core components of emotions: 

(i) Appraisal of the situation: Emotional experience depends on the appraisal of the situation or stimuli and this appraisal depends on the process of attention and meaning assignment. Moreover, the meaning of a stimulus depends on one’s goal and if the goal changes in due course of time, the associated meaning of the stimulus also changes which leads to a change in the experience of emotions. 

(ii) Multimodal: It is a multi-faceted and whole-body phenomenon that involves changes not just at the level of subjective experience but also at the level of behavior and physiology (central and peripheral). 

(iii) Malleability: Emotions do not just influence other systems but other systems are equally capable of influencing emotions. It is this aspect of emotion which can be modulated or changed and thus most important for regulating emotions. 

Literature review on emotion suggests that it can play important roles at multiple levels. It can be a cause or/and consequence of a disease. In his pioneering book, “The deadly emotions”, Ernest Johnson (1990), proposed that anger, hostility, and aggression are responsible for several psychological problems such as depression and chronic stress. The negative consequences of emotions are not limited to psychological problems only but are also found to be an important cause of heart disease, ulcers, cancer, diabetes and hypertension. In the context of heart disease-a type of chronic disease, emotion regulation has been found to play a significant role not only in its development but also during the disease in determining illness outcome (Mauss & Gross, 2004). 

The presence of an illness specifically a chronic illness can also lead to the development of emotional problems like depression and anxiety in type 2 diabetes mellitus patients, which can affect the Quality of Life (QoL) of these patients (Nouwen et al., 2010). The presence of depression has been also found to affect the quality of life negatively in diabetics (Verma et al., 2010) as well as in normal populations (Arslan et. al., 2009). Similar results have been reported for other chronic diseases like cancer (Weinbergeret, Bruce, Roth, Breitbart, & Nelson, 2011; Cataldo, Jahan, & Pongquan, 2012) and arthritis (Covic et al., 2012; Matcham, Rayner, Steer, & Hotopf, 2013).   

Since emotions play a significant role in determining our well-being, an inability to regulate them could impact our mental and physical health both negatively. Existing scientific studies have positively identified emotional dysregulation as the cause of various psychological disorders and health issues (D’ Avanzato et al., 2013; Aldao, Nolen-Hoeksema, & Schweizer, 2010). 

On the other hand, successful regulation is associated with resilience against depression and anxiety in patients (Southwick et al., 2005). Therefore, it could be concluded that emotions improve as well as deteriorate one’s overall health depending upon how we manage them. 

Emotion Regulation

Thompson (1994), has defined emotion regulation as, “all the extrinsic and intrinsic processes responsible for monitoring, evaluating, and modifying emotional reactions, especially their intensive and temporal features, to accomplish one’s goal” (p. 27-28). Whereas Gross (1998) has defined it as “the processes by which individuals influence which emotions they have when they have them, and how they experience and express these emotions” (p. 275). However, it is important that the regulation of emotions should be in accordance with the demands of society as well as the need of the individual (Cole, Michel, and Teti, 1994). 

Although, there is no consensus among scholars on what should be called ‘emotion regulation, however, existing literature does recognise Cognitive Emotion Regulation Strategies (CERS) as a better way of regulating emotions than any non-cognitive ways (Gross, 1998). Cognitive emotion regulation can be defined as a set of those strategies that use cognitive faculties to regulate one’s emotions. Although there are various cognitive strategies, the literature identifies four maladaptive strategies (self-blame, rumination, catastrophizing and blaming others) and five adaptive strategies (cognitive reappraisal, acceptance, positive refocusing, refocus on planning, positive reappraisal and putting into perspective) (Gross, 2002; Garnefski et al., 2001). 

Out of all these cognitive emotion regulation strategies, cognitive reappraisal is widely studied and found to be the most effective strategy. It has been found to work as a buffer to anxiety, stress and depression for various illnesses (Karademas, Tsalikou and Tallarou (2011). It involves: recognising one’s negative emotional state and then reinterpreting the situation to reduce the severity of the negative response.

For example, if someone fails in any job interview and instead of feeling dishearten, he/she may view this failure as an opportunity to improve his/her skill. This indicates that the individual practices cognitive reappraisal techniques to deal with the resulting negative emotions. Similarly, in the context of health, if someone got diagnosed with diabetes then reappraising this emotion-inducing situation as an opportunity to improve one’s lifestyle, is another example of cognitive reappraisal.

All these re-appraisals of the above-mentioned situations are not based on purely irrational thoughts but also contain a kernel of truth. Being an effective way of regulating emotions, cognitive reappraisal plays wonders by reversing our emotions back to normal. Next time when you find yourself getting involved in an emotion-inducing situation, consider reappraising it using the following strategies:

● Try to see the other side of the situation 

● Try to have other’s perspective 

● Try to acknowledge, accept the situation and then respond instead of reacting

● Try to remember every experience teaches us something even the bad ones

● Try to focus on those aspects of any situation which you can control like your response, thoughts etc.

● Let those things go which are beyond your control like how others react, their attitude etc. 

● Try to remember that the effects of bad events are temporary

● Try to be open to every experience

● Engaging in positive self-talk

● Lastly, compassion and love go long way whether with others or with ourselves. 

The article is written by Prof. (Dr.) Arti Singh, Assistant Professor, Jindal School of Psychology & Counselling (JSPC)

References

Suri, G., Sheppes, G., & Gross, J. J. (2013). Emotion regulation and cognition. In Robinson, M. D., Watkins, E. R. & Harmon-Jones, E. (Eds.). Handbook of cognition and emotion (pp. 281-291). New York, NY: Guilford.

American Psychological Association (2022). Emotions. APA Dictionary of Psychology.

Gross, J. J., & Thompson, R. A. (2007). Emotion regulation: Conceptual foundations. In Gross, J. J. (Ed.). Handbook of Emotion Regulation (3-24). Guilford press.

Johnson, E. H. (1990). The deadly emotions: The role of anger, hostility, and aggression in health and emotional well-being. Praeger Publishers.

Nouwen, A., Winkley, K., Twisk, J., Lloyd, C. E., Peyrot, M., Ismail, K., …& European Depression in Diabetes (EDID) Research Consortium. (2010). Type 2 diabetes mellitus as a risk factor for the onset of depression: a systematic review and meta-analysis. Diabetologia, 53(12), 2480-2486. DOI: https://doi.org/10.1007/s00125-010-1874-x

Verma, S. K., Luo, N., Subramaniam, M., Sum, C. F., Stahl, D., Liow, P. H., & Chong, S. A. (2010). Impact of depression on health related quality of life in patients with diabetes. Annals Academy of Medicine Singapore, 39(12), 913. https://open-access.imh.com.sg/handle/123456789/4499

Arslan, G., Ayranci, U., Unsal, A., & Arslantas, D. (2009). Prevalence of depression, its correlates among students, and its effect on health-related quality of life in a Turkish university. Upsala journal of medical sciences, 114(3), 170-177.

Weinberger, M. I., Bruce, M. L., Roth, A. J., Breitbart, W., & Nelson, C. J. (2011). Depression and barriers to mental health care in older cancer patients. International journal of geriatric psychiatry, 26(1), 21-26.

Cataldo, J. K., Jahan, T. M., & Pongquan, V. L. (2012). Lung cancer stigma, depression, and quality of life among ever and never smokers. European Journal of Oncology Nursing, 16(3), 264-269.

Covic, T., Cumming, S. R., Pallant, J. F., Manolios, N., Emery, P., Conaghan, P. G., & Tennant, A. (2012). Depression and anxiety in patients with rheumatoid arthritis: prevalence rates based on a comparison of the Depression, Anxiety and Stress Scale (DASS) and the hospital, Anxiety and Depression Scale (HADS). BMC psychiatry, 12(1),1.

Matcham, F., Rayner, L., Steer, S., & Hotopf, M. (2013). The prevalence of depression in rheumatoid arthritis: a systematic review and meta-analysis. Rheumatology, 52(12), 2136-2148.

D’Avanzato, C., Joormann, J., Siemer, M., & Gotlib, I. H. (2013). Emotion regulation in depression and anxiety: examining diagnostic specificity and stability of strategy use. Cognitive Therapy and Research, 37(5), 968-980.

Aldao, A., Nolen-Hoeksema, S., & Schweizer, S. (2010). Emotion-regulation strategies across psychopathology: A meta-analytic review. Clinical psychology review, 30(2), 217-237.

Southwick, S. M., Vythilingam, M., & Charney, D. S. (2005). The Psychobiology of Depression and Resilience to Stress. Annu. Rev. Clin. Psychol, 1, 255-91.

Mauss, I. B., & Gross, J., J. (2004). Emotion suppression and cardiovascular disease: Is hiding your feelings bad for your heart? In L. R. Temoshok, A. Vingerhoets, & I. Nyklicek (Eds.). The expression of emotion and health (62-81). London: Brunner-Routledge. 

Thompson, R. A. (1994). Emotion regulation: A theme in search of definition. Monographs of the society for research in child development, 59(2‐3), 25-52.

Gross, J. J. (1998). The emerging field of emotion regulation: an integrative review. Review of general psychology, 2(3), 271-299.

Cole, P. M., Michel, M. K., & Teti, L. O. D. (1994). The development of emotion regulation and dysregulation: A clinical perspective. Monographs of the Society for Research in Child Development, 59(2‐3), 73-102.

Gross, J. J. (2002). Emotion regulation: Affective, cognitive, and social consequences. Psychophysiology, 39(3), 281-291.

Garnefski, N., Kraaij, V., & Spinhoven, P. (2001). Negative life events, cognitive emotion regulation and emotional problems. 10.1016/j.paid.2006.04.010 Personality and Individual differences, 30(8), 1311-1327.

Karademas, E. C., Tsalikou, C., & Tallarou, M. C. (2011). The impact of emotion regulation and illness-focused coping strategies on the relation of illnessrelated negative emotions to subjective health. Journal of Health Psychology, 16(3), 510-519.

Dr. Sreeram Chaulia is a social scientist and an opinion maker on international issues. He holds a Doctorate (Ph.D.) and a Master of Arts (M.A.) in Political Science and International Relations from the Maxwell School of Citizenship and Public Affairs, Syracuse University, USA and a Master of Science (MSc.) degree in History of International Relations at the London School of Economics and Political Science, UK. He was a Radhakrishnan British Chevening Scholar at the University of Oxford, UK, where he obtained a Bachelor of Arts (B.A.) in Modern History. He also has a Bachelor of Arts Honours (B.A. Hons.) from St. Stephen’s College, University of Delhi, India.

Founded in 2011 with the objective of imparting insights on the latest issues and trends in Global Affairs and International Affairs, Jindal School of International Affairs (JSIA) is India’s first global policy school. The school is amongst the 12 schools of 91̽�� (JGU) provides a wide range of interdisciplinary degree programmes at both undergraduate and postgraduate level.

JSIA has carved for itself a position of pride of place among world-class entities engaged in the analysis of such themes. Its journey is facilitated by its diverse Faculty – comprising academics, scholars & researchers, social scientists, authors, practitioner lawyers and diplomats and other eminent experts – drawn from both India and abroad.

Its unique pedagogy of mixing academic research with a spirited discussion on ongoing issues – political, security, defence & strategic, diplomatic, global economic and multilateral problems – confronting the comity of nations, empowers its vibrant student community with in-depth expertise and skills for engaging on such aspects in their subsequent, professional careers. It is a matter of satisfaction that for many years running now, JSIA students are regularly finding placement in reputed think tanks, MNCs, Media and PR groups, UN and multilateral bodies, diplomatic missions, NGOs, and other such organizations.

Academic Programmes at JSIA

JSIA aims to train students for international careers and offers a 3-year degree in B.A. (Hons.) Global Affairs, B.A. (Hons.) Political Science and B.A. (Hons.) Diplomacy and Foreign Policy. At the postgraduate level, JSIA offers M.A. in Diplomacy, Law and Business which is intended to be neither a totally academic nor a fully vocational one. It stresses theoretical research but insists on relating it to empirically rich phenomena from the social world.

Jindal School of International Affairs offers both Full time and Part time Ph.D. programmes. The school places strong emphasis on geo-politics and global studies that are largely affecting international relations in the age of globalization. JSIA has also collaborated with the globally acclaimed online education platform Coursera to provide the Master of Arts in International Relations, Security, and Strategy programme.

It is certainly understandable, even today, that some people experience stress and anxiety, characterized by feelings of nervousness, worry, or unease. People remain concerned about becoming infected, the health and safety of loved ones, economic disruptions, instability in family routines, and other disruptions to daily life. People may feel overwhelmed and unable to deal with day-to-day activities when stress and anxiety are extremely intense or persistent. Mental distress can also weaken the immune system, making individuals more susceptible to the coronavirus and all manner of physical illness. 

Fortunately, a return to normalcy seems to be finally upon us. By way of illustration, 91̽�� (JGU) welcomed back students this past March, reopening the main campus. While a departure from mandated quarantine is welcomed by most—allowing people to return to work or study, engage in outside activities, and socialize—it can also be a source of concern or dread. Post-quarantine anxiety may occur, for example, when one finds themselves surrounded by large crowds of people after such a prolonged period of limited social exposure. While returning to normalcy can be challenging, it is an important step toward the restoration of one’s mental health. Not to say such changes are easy. A 2021 survey by the American Psychological Association found nearly half of all survey respondents (49%) felt anxious about a return to person-to-person interactions.

Stress, especially chronic or prolonged stress, can have profound effects on the body. Stress is known to activate the so-called HPA axis, involving the Hypothalamus, Pituitary gland, and Adrenal glands. The end result is the release of adrenaline and a stress hormone called cortisol. Prolonged elevations in cortisol, due to chronic stress, exerts deleterious effects on the gastrointestinal system and many other parts of the body. Cortisol, for example, drives an elevation in both heart rate and blood pressure—preparing individuals for fight-or-flight—which is tied to a variety of cardiovascular issues. As such, long-term stress can increase an individual’s risk for hypertension, heart attack, or stroke. A less severe, but no less disruptive consequence of chronic stress involves muscle tension—imagine someone gritting their teeth. Musculoskeletal pain is also associated with both tension- and migraine headaches which can be highly disruptive in a person’s day-to-day living.

Of course, there is no single approach for dealing with stress and anxiety. However, a proactive approach to self-care and mindfulness will go a long way toward healing and repairing the physical and psychological toll of covid-19. It is important, when possible, to not do it alone—mental health is a collective responsibility and requires sustained efforts by individuals, families, and communities. To that end, it is well established that the use of appropriate precautionary behaviour, including face masks and social distancing, can ease one’s anxiety, allowing individuals to feel more confident in their ability to effectively manage social interactions. Such behaviour should be encouraged, not disparaged. Maintaining, or reestablishing, social connections with family, friends, and colleagues—whether online or in person—can help ease social anxiety. Relaxation techniques such as meditation or deep breathing exercises have also been shown to effectively reduce muscle tension and increase one’s psychological well-being. Alterations in sleep, including insomnia, are common symptoms of anxiety. It is imperative, therefore, to maintain a normal sleep-wake cycle and attain proper rest each night. It is also vital to stay physically active and exercise—maintaining a healthy body is one of the best ways to sustain a healthy mind. Finally, excessive consumption of licit or illicit substances, such as alcohol, nicotine, cannabis, or narcotics, should be avoided. Such substances may provide short-term stress relief, but they typically prolong and exacerbate anxiety in the long run.

Providing guidance and counsel on mental health issues is one goal of the Jindal School of Psychology & Counselling (JSPC) at the 91̽�� in Sonipat, India. Offering a three-year B.A. (Hons.) programme in Psychology, JSPC has quickly established itself as a premier programme in undergraduate education. This August, JSPC and our academic partner, the Jindal Institute of Behavioural Sciences (JIBS), will initiate a Master’s degree in Applied Psychology. The two-year programme offers three specializations: Community Psychology, Forensic and Investigative Psychology, and Industrial and Organizational Psychology.

The undergraduate and postgraduate programmes are designed to provide the means and opportunities for students to stretch themselves intellectually and reach their full potential in psychology and beyond. The mission of JSPC is to nurture and educate the next generation of psychologists to assist those in need and to better prepare the country for future mental health crises.

The article is written by Prof. (Dr.) Derick H. Lindquist, Professor and Dean, Jindal School of Psychology & Counselling (JSPC).

Dr. Sahni is the second person from India to be elected as the Vice President of WSV. As the new Vice President, Dr. Sahni will serve a two-year tenure starting June 2022. WSV is a non-governmental organization focusing on research in victimology with members from areas such as academia, policy making, and governance. It holds special consultative status with the United Nations. Earlier, Dr. Sahni was elected as an executive member of WSV for a period of five years. Both the positions will run concurrently.

“I am elated for being elected to such a prestigious office. I will continue to promote victimology, not just nationally but internationally through various events, courses and projects in the pipeline for future endeavours,” shares Dr. Sahni, who is also Director at Centre for Victimology and Psychological Studies (CVPS) in 91̽��.

“I am confident that my candidature will help in advancing research in the field and positively contribute to the objectives of WSV,” he added.

It is pertinent to mention that Dr Sahni is contributing to international victim assistance programmes through his membership in the UN Liaison Committee with WSV. He has also been involved in promoting victimology research through his role as editor-in-chief of the journal “Global Advances of Victimology & Psychological Studies”.

Prof. Sahni is the member of the JGU Governing Body and also acts as an Advisor to the Vice Chancellor. Earlier this year in February 2022, Prof. Sahni was also appointed as ‘Professor of Eminence’ for a period of five years by the Guru Nanak Dev University.

Dr. Sahni is a distinguished scholar in the field of Psychology and his research interests span in the areas of Criminal Psychology, Cognitive and Neuropsychology, Competency Mapping, Organizational Development, and Leadership. He holds a Ph.D. degree in Organizational Behaviour and possesses an extensive and rich experience of 34+ years in Academia, Industry and the Governmental Sector.

As a Professor at JGU, Dr. Sahni has been teaching courses such as Criminal Psychology, Consumer Psychology, Competency Mapping, Organizational Behaviour, Organization Development & Management of Change, Business Communication and Etiquette, Leadership, Compensation & Benefits and Management Consulting Fundamentals to students across all schools of the university. He has taught in various universities overseas as a Visiting Faculty member, namely, China University of Political Science and Law, Beijing, and Nanjing University, Nanjing in China amongst others. Dr. Sahni is also a certified Edward de Bono Six Thinking Hats Trainer. He has trained 1.71+ lakh school principals and teachers, senior Government officials, industry professionals, besides many more in over 50 countries on topics such as competency mapping, business communication, decision making at workplace, stress management, performance enhancement, emotional intelligence, best teaching practices, inspiring leadership etc.

He has published more than 40 research articles in International and National indexed Journals, and about 25 book chapters. With 19 Books to his credit, some of the recent ones are; Criminal Psychology and the Criminal Justice System in India and Beyond (Springer Nature), Internet Infidelity: An Interdisciplinary Insight in a Global Context (Springer Nature), Piracy in the Digital Era: Psychosocial, Criminological and Cultural Factors (Springer Nature), The Death Penalty: Perspectives from India & Beyond (Springer Nature), Maximizing Human Potential Through Behavioural Competencies: 100 Core Competencies (Bloomsbury), Strategic Compensation Management & Design (Bloomsbury), and Conflict: The Police and The People (Lexis Nexis).

At JGU, Prof. Sahni also plays an active role at the Jindal School of Psychology & Counselling – India’s First Transdisciplinary Psychology School which offers two interdisciplinary degree programmes: B.A. (Hons.) Psychology and M.A./M.Sc. in Applied. The post graduate programme is jointly provided by the Jindal Institute of Behavioural Sciences (JIBS) and the Jindal School of Psychology & Counselling (JSPC) and uses the expertise and experience of both.

Dr. Sahni is one of the few Indian psychologists to have dispensed his immense knowledge towards the development of society and nation with his remarkable vision. Through his astute leadership, Dr. Sahni has been able to touch the lives of so many people in the education sector across the country and even abroad.

Know more about him and his work here:

Inflation has been always under the surveillance of the RBI as it is one of the main objectives of any Central Bank (CB). In a situation like this, one can expect a contractionary monetary policy from RBI which will eventually raise the interest rates across the board and choke the rising inflation rate. And that’s what RBI did exactly on 4th May 2022 but at a much smaller scale than required. On the basis of an assessment of the current and evolving macroeconomic situation, the Monetary Policy Committee (MPC) decided to increase the policy repo rate under the Liquidity Adjustment Facility (LAF) by 40 basis points to 4.40 per cent with immediate effect. However, we must understand that RBI was not in a position to raise the rates by significant amount to combat inflation due to the following reasons. We know that the last two years have been difficult for the world economy on account of the COVID-19 pandemic. Repeated waves of infection, supply-chain disruptions and, lack in consumer confidence have created particularly challenging times for policymaking. On top of it the rate of investment in Indian economy has dried down since 2014. Even before being hit by the pandemic, investment in the Indian economy was not at its best. The Indian economy was already in slowdown which further faced hurdles during the pandemic. In order to jumpstart the economy several supply side reforms were
introduced by Central Government. These supply-side reforms included but not limited to deregulation of numerous sectors, simplification of processes, removal of legacy issues like ‘retrospective tax’, privatisation, production-linked incentives and so on in recent times.

Overall, the major macro-economic stability indicators suggest that the Indian economy is well placed to take on the challenges of 2022-23. Given this background it was very unlikely or challenging for RBI to raise the rate of interest by significant amount which would inevitably put a halt in the revival of the economy and not complement the efforts taken by government to put Indian economy back on track. In addition the intensifying of geopolitical tensions, widespread toughening of global commodity prices, the probability of protracted supply chain disruptions, disruptions in trade and capital flows, deviating monetary policy responses and instability in world-wide financial markets are conveying continuously substantial upside risks to the inflation and downside risks to domestic growth. Thus, on one side RBI would surely want to keep the interest rate low. On the other hand, the current spike in inflation demands a hike in the interest rate.

No doubt, the scenario was vulnerable. Economists recognized and suggested that one possible way to slowdown the northward movement of inflation in immediate short run can be achieved to some extent by reducing the prevailing massive taxes and surcharges on petrol and diesel. The components of petrol and diesel prices in India is comprised of price charged to dealers (includes freight charges), excise duty levied by centre, sales tax/Value Added Tax (VAT) imposed by state and dealer commission. Public sector Oil Marketing Companies (OMCs) modify the retail prices of petrol and diesel in India on a dayto-day basis, according to fluctuations in the price of global crude oil. The price charged to dealer includes the base price set by OMCs and the freight price. Last year on average the price charged to dealers makes up 42% of the retail price in the case of petrol, and 49% of the retail price in the case of diesel. On average, state governments collect 23% on every litre of petrol and 15% on diesel.

The Centre earned nearly Rs 8.02 lakh crore from taxes on petrol and diesel during the last three fiscal years, of which more than Rs 3.71 lakh crore was collected in financial year 2021 alone. It needs to be noted that unlike excise duty (levied by Centre), sales tax is an ad valorem tax, i.e., it does not have any fixed value, and is charged as a percentage of the price of the product. This indicates that while the value of excise duty element of the price structure is flat, the value of the sales tax component is dependent on the other three components, i.e., price charged to dealers, dealer commission, and excise duty and thus keeps on varying. On the other hand, centre’s excise duty is 33% and 34% on one litre of petrol and diesel respectively. Thus 56% of the price a consumer pay on petrol/diesel is nothing but tax. Undoubtedly these taxes increase the price of petrol and diesel. Thus, Central and State Governments had no choice but to reduce duties on petrol and diesel. Both Centre and state finally took the stand of reducing huge taxes and duties associated with petrol/diesel (better late than never!) for coming months till inflation cools off and there is a significant drop in oil prices in the international oil market. The decrease in taxes & duties in petroleum and diesel by both state and central governments surely offered some relief to consumers from soaring inflation without hugely troubling the key interest rates.

The article is written by Prof. (Dr.) Subaran Roy, Professor, Jindal School of Government and Public Policy.

Evolution of Behavioural Finance

Following the work of Richard Thaler, Daniel Kahneman, Amos Tversky and others a new branch of Economics was born. Although the use of behavioral factors in explaining individual and collective choice is not new, work by Thaler and others was responsible in formalizing the discipline. Some of the leading economists from the 18^th to the first half of the 20^th century such as Adam Smith, John Maynard Keynes and Irving Fisher had already brought aspects of human psychology and behavior into their writings. However, the rational expectations revolution of the second half of the 20^th century made almost everyone believe in the rational optimization behavior of agents which dominated the economics and finance field.

What is behavioral finance? What do they contribute to our understanding of financial markets? These questions are perhaps best understood by some examples:

Thaler was a graduate student at the University of Rochester in the early 1970s. He was working on a dissertation on the value of human life when one day he decided to conduct some surveys and stumbled upon one of the fundamental results in behavioral economics known as the ‘endowment effect’:  in his survey participants were asked how much they would be willing to pay to reduce their probability of dying over the next year by 0.001. He also asked them how much they would need to be paid in order to accept an 0.001 increase in this probability.        

After collecting this data, Thaler noticed something curious: the amount people were willing to pay to reduce their probability of dying was much lower than the amount they required in order to accept an increase in this probability, even though traditional economic theory predicted that the two quantities would be roughly equal.

This resulted in the ‘endowment effect’ literature where the amount people are willing to pay for an object of economic value is much lower than the amount they are willing to accept in order to give the object up.

Such theories where the psychology of the human brain is brought in to explain behavioural anomalies in human and market behaviour has led to the birth of and Behavioural Finance. There are many factors that go into decision making apart from selfish rationalism. These include cognitive, cultural, psychological, emotional and social factors. Some of the theories that have been developed following the pioneering work of Thaler are: nudge theory, bounded rationality, prospect theory, herd behaviour etc.

Why study Behavioral Finance?

The main difference between traditional finance and behavioral finance is the fact that traditional finance theories require the assumption that agents are rational. This is equivalent to assuming that no other factors apart from their narrow self-interest and rationality affect their behavior. While rationality is a sensible thing to assume, surely the decisions that agents take with regard to finance are affected by their culture, emptions, social norms and psychological/cognitive factors.

Behavioral finance tries to find explanations with regard to when and why people deviate from rational behavior and rational expectations. This does not mean behavioral finance gets rid of rational behavior and relies on irrationality. As Kenneth Arrow said – there can be no theory if there is no rationality. Instead, behavioral finance builds on traditional rationality to include behavioral traits to create a more nuanced understanding of financial decisions.

A good understanding of psychology, economics and social sciences will help a finance professional develop long-term relationship with their clients. Ultimately the decisions made in the financial markets are by humans and therefore a financial advisor needs to take into consideration the human elements of their clients while they provide investment advice or conduct financial analysis. The complex nature of human beings is best disentangled when finance professionals take into consideration emotions and psychological factors.

The Nobel Prize winning economist Daniel Kahneman, investors who invest on their own make ‘large and expensive’ mistakes. This is why investment firms, whether it be portfolio management or wealth management firms, need to be aware of the biases that inevitably creep in while making decisions. This is what Richard Thaler calls ‘anomalies’.

One example of such a bias is called ‘recency bias’. This bias arises when investors seek information that reinforces their own or their peers’ established perceptions. In volatile markets, investors may overestimate the risk in their portfolio and rotate towards safety assets without any economic or fundamental reason for it. On the other hand, positive short term gains can lead to investors taking unnecessary risks.

Careers in Behavioral Finance

Being a new field of inquiry, behavioral finance poses many questions that have not been researched earlier. The availability of high frequency data and advanced software now make it possible for researchers – both in academia and corporate firms to analyze the irregularities in financial markets and come up with detailed explanations as to why these irregularities occur. And how does an investor protect themselves from making large and expensive mistakes and pick investment avenues which are best for them.

In academics the pursuit of unique and innovative research questions can be a lot of fun. In today’s world, firms who invest in hiring researchers with proper training in how financial markets operate will beat those who do not. Therefore, the understanding of behavioral aspects of finance can help in building exciting careers both in academia and industry. The true competitive advantage is knowledge and those who understand finance from a behavioral point of view, in addition to the conventional theories will always have a competitive edge. The large financial industry, in India and abroad is always on the lookout for well-trained professionals who enjoy learning, researching and taking action on the basis of their research. Financial advisors need to find the right balance between what their clients want and what they need. And this can only be done with a good understanding of finance, cognitive biases and psychological factors that go into decision-making.

Afterall we are humans, not robotic self-interest ‘rational economics actors’, right?

Programmes Offered by JGU:
91̽�� offers an innovative 2-year M.Sc. in Finance programme. Behavioural Finance is a specialization offered as part of the M.Sc. Finance Programme. This unique and rigorous programme uses Jindal School of Banking & Finance’s focused and data intensive approach to deliver a one-of-a-kind and unique curriculum.

The article is written by Prof. Soumyadip Roy, Associate Professor and Assistant Dean (VITAL), Jindal School of Banking & Finance, 91̽��.

The main discussion point with the LIC IPO is whether the objective of the government is to make the state-owned entity market oriented, and market disciplined, or is it to raise money to fund the government expenditures. All facts and figures point to the latter; and if such is the case, the question is whether the funds raised by the government through the LIC IPO will be sufficient to fund a part of its massive INR 7.5 trillion capital expenditure in fiscal 2023, or for that matter attain the estimated disinvestment figure of INR 78,000 crore, and in all this would it be able to bring down the fiscal deficit numbers to a tolerable level. With the estimated fiscal deficit of 6.9%, which is above the budgeted 6.8%; and the expectation to bring it down to 6.4% in the next fiscal, which is still more than double the Fiscal Responsibility and Budget Management (FRBM) level of 3%, the LIC IPO may be inadequate.

Although the government has setup the National Monetisation Pipeline, wherein existing public assets worth INR 6 trillion will be monetised by leasing them out to private operators for fixed terms, and the proceeds will be used for new infrastructure investment. The plan has two significant impediments: first being the uncertain revenue potential because of the numerous uncertainties associated with pricing, bill collection, asset quality, regulatory framework, and frequent policy reversals; and second being the expected efficiency gains by leasing it out to domestic private operators.

All in all, it seems that the government may have to sell a stake of more than 5% in the LIC IPO if it wants to walk the path of fiscal consolidation. A beneficial side effect of selling a larger stake by the government in LIC is that it will reduce the fiscal dominance on monetary policy. Based on the Report of the Comptroller and Auditor General of India on Recapitalisation of Public Sector Banks, the government holds a significant stake of 10 – 11% in almost all the public sector banks through LIC. A reduction of the government’s stake in LIC will indirectly result in added market discipline and regulatory adherence for PSBs. The positive effect of this will be felt in the banking sector in the form of reduction and timely resolution of NPAs.

The article is written by Dr. Sudipta Sen, Associate Professor and Associate Dean (Academic Affairs), Jindal School of Banking & Finance.

In addition to the success of the UPI system as showcased through its widespread adoption and the rapid pace of growth, the recently concluded financial year (FY 2021-22) also saw strides being made in the adoption of the UPI platform at an international level. The Reserve Bank of India and the Monetary Authority of Singapore announced plans in September 2021 to link the UPI system with Singapore’s PayNow system, enabling seamless, low-cost transfers between bank account holders in the two countries. This linkage is expected to go live in July 2022. Nepal became the first foreign country to adopt the UPI platform for “the digitalisation of cash transactions”. Going ahead, Nepal’s adoption of the UPI platform could potentially act as a precursor step to opening up cross-border real-time peer-to-peer payments between India and Nepal. These developments – a consistent growth in the number and volume of domestic UPI transactions, adoption of the UPI platform by other countries, and launching cross-border peer-to-peer transaction services with other countries – provide further evidence of the promise of the UPI platform. This promise was recognised early on when tech giants like Google had recommended the UPI as an example that the US Federal Reserve should emulate in its effort to build the FedNow, a new interbank real-time settlement system for the USA.

However, despite all the accolades that UPI has received so far, there are still some drawbacks to the platform which need to be overcome. One of the main challenges to the broader adoption of UPI was the inability of users without smartphones or mobile internet access to access the system (although users could utilise USSD based services to make UPI transactions, this feature was not very popular). NPCI (the organisation that developed the UPI platform) and RBI recently launched the UPI Pay123 system for users without access to a smartphone, mobile internet, and USSD based services in March 2022. This initiative is expected to provide the subsequent surge in new users’ adoption of the UPI platform.

Another concern is the large number of low-value transactions made through the UPI platform. NPCI estimates that 75% of the retail transactions in India are below the value of INR 100 each. When it comes to UPI transactions, this number is equally high, with over 50% of the offline transactions (transactions conducted in physical stores) being less than INR 200 in value (). The low value of these transactions combined with the MDR (Merchant Discount Rate) charges on UPI transactions being reduced to zero doesn’t incentivise the market to develop innovative solutions to meet challenges.

The final concern is about the nature of NPCI itself. NPCI is the organisation operating retail and settlement systems in India. All payment systems like NEFT, ECH, RTGS, IMPS, UPI, etc., are managed by NPCI. This has raised concerns that NPCI may have become too big to fail and business continuity challenges in case of any systems issues facing the payments systems. RBI had recently invited applications from interested banks and companies to form a New Umbrella Entity (NUE) – an exercise which saw active interest from several large Indian banks, Payment aggregators like VISA and Mastercard, and corporates like the Tata group and Reliance group. However, these plans were put on hold for the time being. Given the rapid increase in transaction volume and value of retail digital payments, it may be time for RBI to restart the process of issuing an NUE license (the RBI Governor has recently announced that the NUE applications are under consideration).

The article is written by Dr. Keerti Pendyal, Assistant Professor and Assistant Dean (Outreach & Promotion), Jindal School of Banking & Finance.

We are often caught contemplating the volatility of the stock market or the patterned rise in the prices of petrol, for instance, without factoring in the volatility of the very force that influences them, i.e. the force of human behaviour. Not that understanding the fundamental and technical aspects of finance are unimportant; it rather forms the core, but without interpreting the human reactions, emotions, and cognitive biases, this study is incomplete and defective.

It is not a challenge to assess why studying human behaviour’s impact on finance is vital. After all, our decision as a customer ultimately frames different financial aspects of a product at the micro level and the total market at the macro level. Everything regarding money and the economy is determined by how humans act in the market, which is, in turn, dependent on our behavior as individual consumers and collectively as a society.

To better comprehend the significance of human psychology in finance in the context of academic programs, one must examine how it is taught in educational institutions. As previously said, we study economics and finance using models and theories that are always founded on certain assumptions. We do not consider the consumers’ human behaviour in these models for the sake of convenience and linearity. This is because we humans do not all behave in the same way, and each individual is unique in terms of how they act and make judgments.

When studying economic models, it’s nearly impossible to consider the diversity of human behaviour. As a result, among many assumptions we make, we merely presume consumer rationality, but it doesn’t stand its ground at a societal level. While these models based on such assumptions can help grasp various concepts, the lack of information about human behaviour in them leaves our comprehension of economic and financial ideas incomplete.

Behavioural Finance is dedicated to addressing this gap in our understanding of how we, as people, influence the financial decisions of market participants. Also, it helps assess how our market actions affect the economy of our society in the longer run. Our choices, while often well-intentioned, are not necessarily reasonable. We may make a decision simply based on our feelings and intuition. Such a step can lead to a slew of bad investments, poor resource allocations, as well as erroneous risk estimates, and so on.

No matter how deeply we delve into these decisions’ financial nuances and repercussions, they are all influenced by distinct human characteristics. This is to say, that without the study of decision-making and more broadly, human behaviour, the study of finance is incomplete. This is precisely where the know-how of the field of ‘Behavioral Finance’ should come in handy. Thus, I firmly believe that greater integration of these two disciplines the need of the hour.

To achieve this end, we at 91̽�� have introduced the M.Sc. programmes in Finance. I believe the course offer a fresh approach, where psychological knowledge serves as the foundation for making informed financial decisions. To re-assert, a psychologically informed lens into finance is the very catalyst we need to step into a financially rewarding future.

Daniel Kahneman, a professor of Psychology at Princeton is someone whom I often quote as a pioneering example. He dedicated his life to research that revealed deep-rooted biases that often interfere with our ability to make sound decisions. While he came from the field that investigates human behaviour, his work generated an impact on the world of finance so significant that he was awarded the Nobel Prize in Economic Sciences in 2002. Kahneman, while the most widely known, is not the only psychological scholar to create ripples in the waters of the financial world. No less than five Nobel Prizes have been awarded to behavioural research that reshaped our approach to finance.

Diving deeper into this ever-evolving lens, it is essential to acknowledge that perhaps our conventional understanding of money-matters, both at the micro and macro levels, rarely intersects with our understanding of human behaviour. And that is what precisely has to change!

The article is written by Prof. (Dr.) Sanjeev P. Sahni, Principal Director, Jindal Institute of Behavioural Sciences (JIBS).