The Approach Economies Must Take to Protect Themselves from Covid-19
Five months into 2020 and thanks to Covid-19 the India economy is in a catastrophic tailspin. The novel coronavirus can cause severe respiratory problems and in more complicated cases, prove to be fatal; unfortunately, the disease has affected economies similarly. Most sectors have been adversely affected by the pandemic and are in distressed situations, unsure of their survival, at least in the short term. While sectors like travel and tourism, and hospitality have taken a major hit, others such as automobiles, oil and gas, industrial tools, etc., are barely scraping through.
It seems the contagious nature of the disease has not just affected humans but economies too, where the downfall of one sector is causing tremors in the whole economy. Travel restrictions imposed by the government initially affected the airlines, slowly spread to the hospitality industry and is now deepening its claws into tourism, exports, and garments sectors and affecting the luxury segment more than the others.
The government announced a massive 20-lakh-crore stimulus package to rev up the economy and provide much-needed liquidity to the SMEs and sectors in dire need of relief. The contours of the package will be clear in the days to come.
For the past five years, the government has been promoting the concept of ‘job creators’ rather than ‘job seekers’; however, it looks like that has hit a major roadblock. With this stimulus package, the government has tried to hit the twin targets of ‘Make in India’ and ‘Buy Indian’. The entrepreneurs who form the backbone of the Indian middle class sector were expecting some relief and now that they have got support from the government, they need to rack their brains to bring around some preventive, assistive and curative solutions to run businesses along with the scourge of the novel coronavirus. For budding entrepreneurs though, it is a tough call whether to take the first step in this volatile situation.
Just like the virus leaves a deeply agonizing scar on the psyche of those it affects, the economy too has suffered the same financial pain as thousands of businesses and firms have been forced to lay off employees, cut salaries and halt operations or simply fold in the face of massive financial losses. The startup ecosystem has also been affected adversely. If the economy does not pick up at the desired pace even after the stimulus package announced by the government, then the already high unemployment rate will zoom up further, the demand for consumer goods will deteriorate and masses will be sucked into the vortex of poverty. The government has provided relief measures and is working on ways to relieve the pain, but this is a crisis of unimaginable proportions and more proactive steps would need to be taken from time to time to cushion the impact.
The government has pumped in money through its various schemes, most notably through its Mahatma Gandhi National Rural Employment Guarantee Act (MNREGA) to help revive the rural economy. However, the need of the hour is to work like an octopus—spread arms across disparate requirements of the various sectors. While the government needs to ramp up the medical infrastructure, it must also think of ways to ease the restrictions imposed, strategize the lockdown exit plan and simultaneously work on hand-holding and relief programmes. On the other hand, firms and businesses may have to think out of the box, devise ways to fight the scourge of Covid-19 and get production lines whizzing again. The world cannot afford to lose this fight and the people must stand tall and strong with the government to win this war.
*Mallika Bhasin is a Young Professional, NITI Aayog. Views expressed are personal.