What will happen to businesses after lockdown?
The times in this Pandemic have been equally and proportionally equipped with Grab-on chances and minimalistic approach for others. The tremendous change in the economy today has to lead us to think deeply while having an armed back up with a disturbed market. India’s GDP had lead to 5% in April during the last 25 quarters, and the GVA grew at 4.9% that is the lowest since 21 quarters.
The unanswered questions we all are waiting to discover! When will it be ended? What will India come up with after the markets have been shaking badly? Will it all be over soon?
Progression? Stagnation? Recession? Depression? Or the great depression?
Let’s examine a few!
Possibly there could be around 3 kinds of Economic curves:
- V curve: The “V” curve that suddenly the economy touches the bottom line and comes straight up. Just how China rebounded, other countries are bound to be rebounded the same way as Coronavirus ends after the 5th stage and will be ended soon.
- U curve: The other type is the “U” curve, that after some time of stagnation, it grows back up
- L curve: The last type is the “L” curve, which is the most dangerous one as the failure continues for a longer time.
Let’s further segregate business categories:
- Winner Industries- E-commerce businesses. Such as Amazon that even grew while the lockdowns with unmanned vehicles and warehouses, also served in Wuhan to a great extent. Also Netflix and Amazon-prime, Video conference apps. Non-cyclic works such as FMCG products even with Pharma and Liquor.
- Loser Industries- Airlines, Travel, Cruise, Construction, Investment Banker, Economy, and Share market, Tourism, Oil and gas, normal retail, professional sports, Transportation, Entertainment and Cinema, Salon, Food, Leisure, Hospitality, etc.
- In-Between Industries- The lines of Banking, Education, Healthcare, Manufacturing, Hence depending on how they choose to be a part of growth or the downfall.
It all depends on, Can they be a part of faster adoption of New Technologies and New process?
The post-crisis depends on this question, as the economy in India depends on the consumption in India, and will it still fall deeper into the pits?
The approach that can be adopted by India can be of:
Long-term geopolitical Advantage:-
Just as Trump regards Covid-19 as the Chinese virus, Instead of Corona Virus that has to lead to world harmony being disrupted with elections in America following up the Trade, as the American companies who give work to China will now be searching for other better alternatives to gain similar outcomes with India being highly open for grabs. Considering not only one superpower into it, it still has the gates open for some other continents that allow an efficient workforce being a developed and a developing country. It is time to be smart now!
Lowering the expenses that have been caused due to the Pandemic:-
As the government has spent highly upon safety and other emergencies, it has to make its income coming faster than ever and that can not only be done with only attaining taxes from the people, but be capable to turn the dice for open opportunities to reach India.
The Key to increasing the pace of the economy, Consumption is the key!
By all means, It’s a cycle that runs on the demand and supply of the people. More the people are spending, more is the cash flow available in the market and the only way to increase it is by increasing the levels of GDP, with giving fair chances to businesses and liquid flow to ease, which has a stagnation as for the month of April.
Consumption comes from, Personal Disposable Income,
Personal income-Personal Taxes= Personal Disposable income.
(1,00,000) – (20,000) = (80,000)
This is when the growth of people contributes to the growth of a nation.
Personal disposable income gets dispersed into two forms during such pandemics into,
- Savings- On most days, any human being will choose to save for the further good of his well-being, but in the condition of such Pandemics, people must spend to have a stable life and support the economy.
- Consumption- If not saving, then the part of spending is down in businesses and circulating the fluids directly into the market with the purchase of casual items and even making big orders.
India was already under the impression of 3 poorly managed balanced sheets:
- That of the Banks- Bad debts, Loans, and much more with the destruction of real estate leading to losses for Banks.
- Corporates- Businesses that required loans were at the verse of helplessness, with all options in front of them being futile.
- Msme- It either supported the big corporates or the consumers, which has no way to perform with no business fruitfulness.
Now, the government had corporate tax cut to 1.45 lakh crores, which directly affected the non-corporate regions that were 98% of the economy and corporates were only 2%.
The three major requirements to improve the economy are with:
- Foreign Investment
That prepares the nation for the best and for the worst! Optimistically, India can be one of those nations that can handle a “V” curve and bounce back to new heights easily.
“If you plan for the unknown, the Unknown shall be the Unaffected for you”
Referential guide taken form Dr.Vivek Bindra and putting them one by one for precise business analysis and better understanding when most needed.
The quarantine can prove to be a time of fruitful activities. Make it a moment of analytical start to a fresh face with your flaws, identified and unknown errors, rectified.