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India’s Pandemic Rebound A Real Wake or Total Fake?

THE CORONA EFFECT

Indian industries today are adopting Innovation and resilience to speed their way out through the pandemic slump and make a speedy recovery. Although, both are depending on a variety of factors including eminent vaccine deployment and effective government measures. Unparalleled and widespread destruction of public life, health and safety across the globe had been the Trademark of 2020 and is still continuing with some forms in 2021. India is no exception to the unparalleled destruction of the economy and public life caused by the pandemic. Industries also had their fair share of learning along the way with many of the industries, states and countries evolving the new norms to anticipate possible economic Outlook also referred to as the ‘new normal.

 

In India, lockdown and pandemics have affected different industries and sectors in disproportionate ways. Where one can see the medical sector and the hospital industry was affected immediately the financial sector receive the blow with the considerable lag as shown by the GDP information released by the government. As the lockdown lifted, easing the movement restrictions, festive demands and revival of various projects by the government boosted the economy. Manufacturing and construction bounced back and the slump in the financial industry have significantly reduced. However, the service sector still remains unaffected by the lifting of lockdown as regional lockdown(s) make it considerably difficult for the service sector to function at optimum capacity.

 

let us look at how the Indian industries are performing in THE CORONA EFFECT:

 

Talking about the automotive the industry has suffered a ‘dual blow’. The sudden closure of factories and the eminent disruption in the supply chains has led to many of the MSME’s in The automotive industry become redundant and useless. These MSME’s are comprised mainly of parts manufacturing, small scale vehicle financing, and small dealers however the conceptualization of digitized and subscriber services, contactless sales, doorstep pickup and delivery and online reaching out to consumers has somewhat helped the automotive sector to bounce back after the pandemic slump.

 

Talking about the tourism sector i.e., the trade, hotels and the Travels industry. The very first catastrophic impact was felt by the hospitality industry as the social distancing norms in the pandemic reduced the reception of tourists and guests across India. However, the venues of hotels and other Lodges available for frontline COVID workers as well as the transformation of these venues to hospitals for covid dedicated treatment have helped the models and concepts survive the sudden economic shock. Thanks to the packages targeted at staycation and innovative delivery concepts have stabilized the sector to a great extent. However, the survival of the sector is still dependent on domestic and international mobility which will depend on synchronized efforts by the world economies to curb the spread of infection; the success of which has been limited so far.

 

If we talk about the media and entertainment industry it has also been hit by the pandemic which has resulted in unemployment and the closing of production units due to lack of capital. However, improvised entities and adopted innovative ways to reach out to the audience made a drastic shift, from the classical form of films and entertainment; which has now evolved into an online platform for media streaming. Also, live broadcasting of events has offered lower operational costs and high financial returns. Freelance agreements and temporary employment contracts have kept the wage growth with the industry subdued due to the pandemic.

 

Turning the wheel to retail and essential goods market the demand for essential goods remained strong whereas the demand for luxury and non-essential goods went down in the pandemic but both markets have suffered a tilt towards The E-Commerce facilities wherein the consumers are now preparing to buy products at an online platform which offers - significant protection from the exposure of COVID-19. Business platforms, retail and FMCG industries are now focusing their efforts to build a flexible distribution network and improve the supply chains to adapt to the new online shopping demands of the 'new normal' world.

And now the industry which has grown the most and was most benefited by this pandemic is the technology and telecom sector. As the pandemic saw a drastic shift, everything went online. Sectors such as E-Commerce, Fin-Tech, Food-Tech, Health-Tech and Ed-Tech has changed the classical scenario by enabling virtual communication, manufacturing and even blasting cybersecurity for industries that are going digital. Innovations in technology broadband services increased to maintain and meet the demands of the online market.

 

Looking at 2021 from macroeconomic forecasting LENS:

 

Though, India is still struggling with the grappling pandemic; still, in 2021 the road to recovery is quite clear with the recent high-frequency data available to us through various economic sources.

 

India also expects, in the fiscal year 2022 a double-digit growth which is the best-case scenario; which means lower infection and fertility rates assisted by widespread vaccine development and distribution. This best-case scenario is Deemed to improve customer and business satisfaction. Stagnation of market demands requiring elastic discretionary goods which is generally spent by higher-income the population was restricted due to mobility restrictions and social distancing conferred by the pandemic. This pent-up capital can further enhance private investment which has seen a decline constantly in the last five consecutive quarters. The impact of government spending financial reforms liquidity packages and RBI measures can further boost the economy.

 

However, this optimistic scenario can have many pitfalls including high inflation rate, unemployment poor wages, low growth, low liquid values which can impact the CPI; especially among lower- and Middle-Class families. Also, due to Limited manoeuvring space in hands of RBI regarding the reduction in policy rates amid inflation, can elevate problems further. The result of which can be directly seen: MSME's loaning the working capital at high-interest rates. Despite the best-case scenario, the output level forecasted will remain less than the pre-pandemic time until the fiscal year 2023 in short, the pitfalls and the journey towards recovery must be course-corrected from time to time for a 'V' rebound curve.

 

The Indian government is trying to push forward the Indian economy with the union budget and increased spending in the health social and defence sector with a growth of 3.5 % to 5% of GDP targeting the world average of 10% in the next 10 years. It will also have the government to strategize and improve defence operational capabilities in the midst of geopolitical tensions. Similarly, improved support for Enterprises for the creation of jobs, boosting of wages, and Hospitality will offer targeted credit line for MSME industries and small-scale industries which are affected; such as Automotive tourism and travel etc.

 

Another important measure is the ease of doing business with the rationalization of tax structure and restructuring of GST with an easy to comply structure is helping in the allocation of resources and investment following transport and logistics planning to enhance manufacturing competitiveness. The government is also trying to improve the strategic economic corridor with different states to allow social inclusion and fair value to landowners while implementing labour laws across the nation equally. With the new digitized and technologically advanced regime government is trying to create less repetitive and more intellectual and cognitive jobs for modern youth and skilled India. The the government today, is on a spree to manage budget and fiscal balance, measures like external borrowing, public-private participation, strategic disinvestment, etc. are some of the options government is exploring to counter the slump of a global pandemic. 

 

With the timely initiated measures and prioritizing spending government is trying to pedal forward productive projects at the same time optimizing the budget allocation with a special focus on digitization. As well as identifying areas with can strengthen the indigenous production so that India may bounce back from the recession. The government is also actively encouraging; secondary supplier relationships and Securing additional critical inventory routes with the intention of firms having a diversified source of import rather than just relying on China. To improve profits several organized players are also entering unorganized sectors which can further enhance and organize productivity in the sector.

 

On a concluding note, I would like to draw an analogy of compass as a compass can point true north but cannot display the pitfalls deserts swamps chasms along the way similarly the Indian government can and sure policies for rebound recovery but cannot foresee the pitfalls and the way have to be course-corrected so that we can keep moving north and keep pace as an emerging Asian superpower