Over the last few weeks I have read many articles about how things will change post COVID. WFH will become a norm. Deglobalisation, with many companies and industries moving out of China to closer home, maybe to India. How technology will become more dominant etc.
While I disagree with some of the above I think our economic focus currently should be not lofty or too far fetched but rooted in reality and now. And the reality about our country is that it is the farming, vast skilled and unskilled labour and the service sector which needs to be reenergised, rebooted and sustained.
Farming sector: We are in the thick of Rabi crop harvesting. Three areas of focus need to be 1) adequacy of labour to harvest 2) Storage and transport 3) Selling of the harvest. With labour force under lockdown or gone back home, 1 is an issue. We have always had inadequate storage so with no transportation allowed this problem with intensify. Mandis are working haphazardly so selling of the harvest is a big issue.
The repercussions of failing to focus on above three will be heavy. There could be food shortages and high prices. Plus farmers will have much less income so not only will rural India be distressed and have much less purchasing power, even the sowing of Kharif crop may take a hit.
Skilled and unskilled labour: This includes permanent factory staff, temp staff and then the migrant labour. While the skilled labour may have it fine after the lockdown most production facilities depend a lot on unskilled or temp labour too. These may not be easily available as they have either gone back home or are totally new so will have to be taught some basics. Their output could be much slower.
Service sector; Broadly I am including things like IT, Hotels, Tourism, Cab services, Food services, e-commerce, Banking, Financial etc. The good news is that technology has already helped these industries a lot. But most of them are still depending upon migrant labour. Ola and Uber have about 60% of their drivers who are migrants. If they have gone back, they will not come back soon. They will have tried to find some work in their home town or village and will be loathe to come back to face EMIs for their vehicles. If they don’t, the companies will have to find new drivers, work with the banks to transfer loans at attractive rates, or banks face higher NPAs. And that’s one sector.
Summer is one of the biggest tourism season. That’s done and dusted this year. So what happens to hotels, restaurants, tour guides, cabs & bus drivers, hawkers, local souvenir shops, even to the local toll and GST collection?
E-commerce will survive but their costs will increase. At least for 6 months anti virus measures and some form of social distancing will have to be maintained. That would also mean POD will become scarce. So less people may use e-commerce. And of course the availability of delivery boys will be a concern.
I hear some stories about how the IT sector is already in dumps as call centres had to be shut down and outsourcing contracts were lost or have been foreclosed. Force majure could be the bane of the IT industry.
Lot of small business in service sector like barber and salon shops, the roadside mechanic shops, non essential shops selling stuff like electrical, electronic, plumbing, showrooms etc will face a double whammy of no revenue and the liability of rents for almost 6-7 weeks. Plus what happens to their labour? They have either gone back or one has paid their salaries to hold them back , which adds to the liability column.
The maid, the driver, the auto rickshaw driver, the labourer, what is their fate? They are the the cogs which keep the wheels of a city running. If we lose them even for a month or two after the lockdown the urban economy will falter. You can WFH but will the laptop repair or the wifi router shop be open? Or if your mobile breaks down?
My take is that if we can currently focus on saving and rebuilding the above then we may be much better off than talking about WFH or Deglobalisation. That to me frankly, is just a bonus. My worry is that will the basic survive?
No comments:
Post a Comment