Ever since the onset of the New Year, the world has witnessed the scourge of novel coronavirus (COVID -19) that has infected the globe bringing grief and life to a standstill for the world community. It has impacted humanity, lifestyles, hurt businesses and economies and given an indelible message to mankind, that wellbeing cannot be taken for granted.
We were facing a difficult global economic scenario prior to the beginning of his pandemic and as if this straw broke the camel’s back by accelerating the turbulence through disruptions of global supply chains, creating demand, supply and liquidity shocks and holding growth to ransom.
Having said as above, these are indeed difficult days and shall pass but life shall surely be looked upon from a newer perspective by individuals and governments alike.
The argument that the velocity of recovery of the US and Chinese economies will provide traction, shape and determine the speed of the global economic recovery is understandable.
A KPMG report “Potential Impact of COVID -19 on the Indian Economy” offers a welcome respite to readers where it indicates that the course of economic recovery in India shall be smooth and fast compared to many advanced nations. As a matter of fact UNCTAD in its latest report ‘The COVID -19 shock to developing nations’ predicts that China and India shall be overcoming the recessionary tendencies, if any, successfully and with ease.
The government of the day in India has to ensure mitigation from this health hazard and provide relief to its large population of the poor. It has then to work, on a war footing, on such policies and programs that offer sustainable solutions to fix this medical crisis immediately and in the long run, ensure the health of the economy, the survival of businesses, provide employment options for the livelihood of the people and take care of a number of vulnerable sections of the society. Resource mobilization and reallocation to stimulate and kick start the economy should be a priority.
The versatile and focused approach as indicated below, (not exhaustive), may lead to the business landscape to evolve in the months to come and establish the foundation of a robust and sustainable economic recovery in India.
- Improved and enhanced offerings of indigenous products and services by the corporate sector of India.
- Shift in business models with increased reliance on e-commerce and digital connectivity.
- Individual and corporate savings to increase with less reliance on leverage, and cash will be the king.
- Creation of a robust and resilient supply chain as a key success factor by businesses.
Having indicated the broader contours of the economic scenario there may be some thrust areas, industrial sectors that may witness increased activity and some that might have a very difficult phase and maybe on the verge of closure/ default.
If presumably this medical crisis is contained by May 2020 and thereafter, very bold, innovative monetary and policy stimuli are put in place by the government than we may witness a strong pull back and see a slow but sure economic recovery. Though it shall be difficult to cover up for the loss of GDP numbers of the first two quarters we maybe in a position to avoid a recession.
Keeping our fingers crossed I would put it this way that the abrupt disruption in the manufacturing sector, the slow down in consumption due to social distancing and lockdown that has altered the demand consumption dynamics and indicating to an economic slowdown of the nature never seen before is reversed at the earliest for the good of one and all.
Dr Rajiv Kumar Maheshwary
School of Management & Commerce