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Impact Of COVID-19 On The Economy
Anyone who says they understand the impact is only kidding themselves. Flexibility and resilience in the industry is the need of the hour.
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We will all come to remember the world, as pre and post COVID-19. Yet, at this point, it seems to be a safety drill. The actual impact of the disease, shutdown and resulting domino effect will be felt for years to come.
It goes without saying that we are still reeling from suppressed consumption and weak growth. The impact of the current quarantine and the subsequent healthcare issues are difficult to estimate. India will hopefully force a 180-degree change in its healthcare systems and spends. We need a far more robust system to keep our guard up in the future.
In terms of an economic impact, we’re staring at an abyss. Our banking sector was already in doldrums, and 3 months in the absence of business activity will mean added stress. Banks will also have to prepare for an increasing pace of defaults and bankruptcies. We will have to pick up the pieces and move along. Certain social contact-based industries are in deep peril. The AIHA (All India Hoteliers Association) has already written to the Central government asking for special help. Not only will they suffer a scarcity of manpower, but for people to accumulate enough disposable income it will take 3-4 months, in the most optimistic scenarios. Other related sectors, like travel, fashion, retail, are equally impacted.
FMCG will survive, as will most businesses that are based on staples. Strong supply chains will ensure that basic commodities keep flowing across the nation. Allying industries in supply-chain will have to adapt very fast, but as most of the country's trade has paused, this too, becomes a game of working capital. The strong will survive.
Apart from essential items however, most companies will now have to fight to gain share of a consumer’s wallet, as spending will become less discretionary and more purposeful. Construction is deeply linked to jobs, but a shortage of healthy labour will stress-test the industry, as it already fights red-tape and over-supply. Insurance will gain a modest uptick, hampered again by the lack of spending power.
No company or sector can remain insulated by this impact. As we say, every business is a people’s business in the end. And we need people to be healthy and fit, for the entire machinery of consumption to keep functioning. It looks like that very core fundamental is under threat. Anyone who says they understand the impact is only kidding themselves. Flexibility and resilience in the industry is the need of the hour.
Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.