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Related to COVID-19, Economy, What next ?
COVID-19 : Study & Impact Analysis
1. Economic disruption
The unprecedented disruption, panic created by Corona Virus pandemic (COVID-19) will change our behaviour in how we live, and how we consume. This behaviour will further reflect into our local economy et large. It is mainly because this pandemic came at a time when most of the world economies are having tough time.
COVID-19 disrupting economies world-wide not just India and brought many threats and opportunities
Threats
- Geo-political restrictions
- Trust among people until a Vaccine
- Frozen Investments
- Unrest in poor & downtrodden
- Commercial real estate contraction
- Restricted Travel
- Stress in Healthcare
Opportunities
- Ray of hope in manufacturing in India
- Remote Working & related economy
- More IT enabled Services
- e-Commerce, e-Health, & e-Delivery
- Glocalisation to promote
- Health Passports
- Consulting Culture rather Employment
2. Impact Assessment
Assessed as on Apr 02nd 2020 with considerable insights.
While we still battling against corona virus Covid19 pandemic (as on Apr 18th, 2020), we learned the behaviour, fair understanding of what would impact our health, behaviour, and economy. Unlike earlier pandemics like SARS, COVID-19 came at a time when 50% of 7.7 billion people are connected to Social networks, where the impact is quite visible that may lead to a possible contraction in the economy.
Post Lockdown Scenario:
- It takes 2.5 times X Lockdown period for people to come out of their homes freely and consume the way they consumed pre-Corona.
- For India, a fully functional society with normal consumption would be in the month of September 2020.
- After-shocks from re-eruption of pandemic in certain pockets of the country.
- Possible mass unemployment, layoffs across many countries including India may occur starting from May 2020. Possible shift from a 'Permanent' employment towards an emerging employee-lite modals, similar to target based work-from-anywhere 'Consulting' culture.
- Stress on Tax collection due to the low economic activity, and NPA threats from public sector banks and companies
- Government to go through Quantitative Easing (QE) to increase the liquidity there by inflation pressure on most.
- Government may promote local manufacturing by curbing the imports of certain non-tech items and may mandate local manufacturing.
- Extreme volatile activity in the emerging economy stock markets, may draw attention from undisciplined or first-time investors.
3. Industry-wise Impact
High Impact
- Tourism
- Travel
- Hotels
- Commercial Real Estate
- Sports
- Automobiles
- Foreign Studies
- Event Management
- Malls & Theaters
- Gems & jewellery
- Housing (Large)
- Old age homes
- Toys
Moderate Impact
- Banking *
- Electronics *
- Meat & Chicken
- Wholesale Foods
- Restaurants
- Logistics
- Housing (Small)
- SMEs *
- Business Services
Low Impact
- Healthcare
- Drugs & Pharma
- Textiles
- Metals & Mining
- Virtual Business Services
Positive Impact
- e-Health & remote Diagnostics
- e-Delivery Platforms
- e-Learning
- e-Consulting (Gig Economy)
- Drive-thru Restaurants
- Data Sciences
- High Technology
- Hygiene Products
- Automation
- Alternative Energy
- Alternative Health
- Virtual Entertainment
- Drones Tech
- Health Score Cards
- Organic Agriculture
- Farm-to-Plate
4. Recommendation for SMEs
Micro, Small, and medium enterprises (MSME in India, and SME in Other Countries) in India are having tough time after the introduction of demonetization, GST with low margins. The Corona Virus affect would be a death knell to SMEs as the businesses are virtually non-functional for more than a month and counting.
EZTax.in recommends the following to see the light at the end of the tunnel.
- Check your cash flows to make sure you can sustain for at least 2-3 months and plan accordingly.
- SMEs who are depending on raw material and / or goods from China may need take serious decisions as the supply is expected to be impacted for ~6 months from Apr 01st - identify alternative sources.
- RBI announced a 3-month moratorium availability on loans covering March, April, May months may ease the situation but it's the SME who need to opt for such moratorium by speaking to their bank or NBFC.
- Reduce the expenditure where possible as the impact would be seen until Sep 2020.
- Though its an emotional subject but founders, owners speak to employees, associates on the reduction in salaries and / or let go where they are non-essential, they understand it's a pandemic. Remember SMEs are the largest employer in India, its the society that needs you, hence its ok to reduce the workforce to stay healthy and revive after some time.
- Where possible bring part-time, work at home workforce (or convert the existing to be that way), as such requirement is expected to stay.
- Franchisee owners to speak to their franchisor to reduce the franchise fees during the troubled times and request them to intervene on the commercial rental contracts as the fees are one of the major components of their business.
- Get bridge loans where available / possible.. speak to us if needed.
- Early startups who are in their product development stage need to re-visit their business case to understand the viability
- Be part of the eco-system, and formal government systems. Are you MSME registered ? & visible .. help should be on the way.. GOI, RBI, Ministry of Finance is expected to have a series of stimulus to revive the economy.
- Understand the difference between Startup vs MSME ?
- Ministry of Corporate affairs gave a golden opportunity to either put a non-functional, non-compliant entities (LLPs and Companies) to close or put it under dormant status by paying nominal fees otherwise may attract higher fees, penalties and interests to MCA.
- Most important of all is to understand that
- You are not alone
- Stay healthy
- Inspire others around you
- it's just a cycle .. we see tomorrow way better than today.
5. The Upside
Organisations who taught us 'Global Warming', 'Climate Change' may say what's happening in the name of 'Corona Virus' is good for ecology, and the mother Earth. Few upsides from this pandemic are
- Unlike other economic crisis India, the recovery is expected to be a "V" shaped (read as 'rapid rebound').
- Consumers may tend to look foreign e-Commerce operators as opportunistic and may favour towards local vendors, which may further help SMEs.
- The mother Earth is greener due to less carbon emissions.
- Disruption in marriages, generally depressive environment may reduce birth rate for few more months.
- India has not seen a 'real' economic shock in its economy for the past several decades unlike US and other developed nations. This event may bring behavioural changes and disruption to the status quo may further increase the productivity.
- The focus on Hygiene & Health may improve the future happiness index.
- World may look at India as an alternative source for manufacturing, further opportunities for SMEs.
- Ease in Cost of capital (low interest rates) may bring additional opportunities for SMEs.
Information & Resources on COVID-19
Use below authorised resources to help yourself.
