What is facing a post Covid India?
Jaan hai toh Jahan hai, words that perfectly sum up the Indian Government’s narrative to drive forth their Covid strategies. Our honourable PM would argue that saving countless Indian citizens was worth the toll taken by the sudden lockdown, the trauma faced by thousands of stranded wage laborers and a host of other not-so-pleasant news, we are greeted with by most news channels everyday. Setbacks and damage faced by the economy seem to be inevitable; merely collateral damage in this battle. Our current leaders confidently maintain that while these setbacks are grave, they are transient. Our knight in shining armour who often wears the hat of the PMO will revive it in no time at all. Don’t you worry, Jaan hai toh Jahan hai.
It’s an undeniable fact - the Indian economy was already struggling, and the damage caused by the lockdown, the trauma and exodus of migrant labour across the country and sudden freezing of both the supply and demand side of things has not lent it a helping hand. Businesses right from agriculture to banks have taken a massive hit and recent rhetoric and steps taken by our government seem to indicate that they aim to take prudent measures to address the challenges our industries have and will be facing in our new normal. While I say this, I’m struck by a remarkable facet that seems to be getting neglected. While several states as well as our central government have been quick to announce changes in labour laws and strategies to mitigate the damage caused to our industries (indicating their promptness in securing the supply side of our economy), little has been spoken of how demand will be driven up.
Consumer behaviour due to the novel coronavirus has potentially been altered for a significant amount of time. Let’s consider the two biggest ways this might manifest in.
The first is a relatively urban phenomenon, to deal with the lockdown, people learnt to do without non-essentials (albeit not without complaints and disappointed sighs). The lockdown for many, entrenched the divide between what is “good to have” and what is a “must have”. Such a mindset shift could potentially result in a drastic change in purchasing habits of countless individuals. This would mean a slowdown in demand for myriad industries, specially e-commerce and tourism platforms. Less demand might lead to less capital which eventually would lead to a decline in the already grim employment scenario. This might lead companies to concentrate operations and shift towards automating many jobs.
Second, the trauma of the lockdown meant a loss of livelihood and drying up of the savings many families had been able to accrue. Many of these families either might not have any means to support themselves, leading to a heavier strain on the already stretched thin state machinery or might simply choose to save what little they have as opposed to spending it.
A post - Covid India might thus be a risk averse and miserly India; intent on saving and letting financial capital sit instead of putting it into the economy. A daunting challenge facing our Government will likely be maintaining a balance between the supply as well as demand side of things. For now, our only source of solace seems to be Jaan hai toh Jahaan hai.
