New Delhi, April 25: This is indeed a black swan event says Alpesh Patel, a tech entrepreneur and management consultant who writes about how the nation needs to reboot.
As told to IANSlife:
The 2002 SARS outbreak which sustained over three quarters and killed 780 people reduced China’s GDP growth rate by 1 percent and it’s recovery took nearly two years. The current outbreak is even bigger with over 1 million affected and 57,000 dead.
The MD of IMF has called this a recession worse than the 2009 financial crisis. A Coronavirus battle involving the lockdown is bound to cripple India’s economy too.
So far, India’s approach has been to prioritize public health over saving the economy but with every passing day, the lockdown is attacking the health of our economy like a deadly virus. We are facing both supply and demand constraints; workforce, supply chains, imports, and exports are affected. Almost all sectors like hospitality, aviation, surface transport, real estate and manufacturing are observing negligible activities. If the virus scare prolongs more than a few weeks, the poor would lose all their savings, SMEs would struggle to survive, companies would start retrenching and consumer confidence would fall.
Revival will then be a mountainous task and take many quarters or even years to reboot. We will, therefore, have to begin the reboot while we fight the virus.
Rebooting should focus on three things:
i) offering a lifeline to the vulnerable sections
ii) regaining economic activities
iii) avoiding a relapse of the virus outbreak.
Firstly, we need to support the poor, farmers and informal workers who constitute over 85 percent of the Indian workforce. The Rs. 1.7 lakh crores package by the government was a good start. Free ration and cash support will have to continue to reach every corner till this section resumes their work. We will need to offer financial packages to SMEs to stay afloat till their business volumes stabilize.
We should gradually open up sectors starting with essential ones. We should support the farmers to continue production and enable downstream processing and logistics. We will have to isolate ‘hot-spots’ of virus-infected areas and revive economic activities and supply chains in safe areas for which we could leverage the e-commerce companies. Companies may identify a few (younger) employees to return to work using their personal transportation. Gradually public transport facilities can be started with a set process to disinfect the trains, buses or aircrafts frequently. Making virus testing facilities available up to district levels will be critical to achieve all of this.
The government should incentivize companies to avoid retrenchments. RBI’s interventions to allow delayed interest payments, improve liquidity have been commendable steps. As NPAs rise, the government will need to support the banks to maintain sufficient capital and continue lending.
Finally, India should be watchful and avoid any relapse. We may stop entry of international passengers for a longer period. We should use mobile apps to track the health of people who begin working. We need to keep sufficient capacity of quarantine facilities and testing kits ready to avoid a panic situation.
The Government has already offered insurance to healthcare staff but their facilities (masks, hazmat suits) need to be spruced up. We should ensure that we wisely utilize the $1 Billion emergency fund. Indian pharma industry needs to work closely with global players to find a vaccine and medicine for Coronavirus. In this warlike scenario, the government may also have to compromise on the fiscal deficit targets to revive the economy.
If we can achieve this in less than three quarters, it will be praiseworthy.