Welcoming the New Normal - Emergence of New Businesses in Post COVID-19 Era

The world has never been so calm before, at least in last few generations. Some pockets might have experienced curfews or bandhs but never ever a complete lockdown. As mere humans we are unlearning, reinventing, and nature is testing our capabilities and value systems. The COVID-19 pandemic is multiplying its effect on everyone’s life worldwide and India too is walking a tightrope when it comes to finding solutions for a post COVID scenario. We have entered lockdown 2.0 and waiting for the world to wake up from slumber. Since it is an unprecedented time we are presented with an unprecedented scenario in every aspect of business as none were prepared for a disruption of this scale. While social distancing and staying at home is the need of the hour to contain the pandemic, the lengthening of the mandatory stay-at-home period to 40 days from 21 days will result in a direct output loss of more than 8% with a possible decline in gross domestic product for the year to fiscal year March 2021 at 0.4% and 0.1% respectively. As per the World Bank's latest assessment, India is expected to grow 1.5 per cent to 2.8 per cent.

Similarly, the IMF has projected a GDP growth of 1.9 per cent for India in 2020, as the global economy hits the worst recession. India's forex reserves are drying, the rupee has taken a hit, and exports are refusing to pick up pace amid closed borders. The country remains virtually shut since March 25 and businesses face an uncertain future. The recovery will be a prolonged process, with supply chain and logistics sector on the course of normalisation over the next few days it will take months to bridge the demand supply gap.

The coronavirus outbreak and the subsequent country-wide lockdown has no doubt deeply impacted India's economy, cutting across businesses, processes, and sent shockwaves prior to the year-end account book closures. With businesses expecting a significant decline in revenues and falling demand there will be resultant job losses or pay cuts. Especially sectors like tourism, hospitality, automotive, real estate are vulnerable sectors as these will not be able to recover current losses in near short term. Purchase of assets such as homes, jewellery will be put on hold due to liquidity of cash, along with durables such as clothing and footwear, furnishings, vehicles will be postponed. A fiscal stimulus package by the Government in fast track mode for these industries will help them immensely.

RBI's liquidity injection could help the real estate sector, which is one of the biggest employment generators and has been crippled for several years. Add to it GST holidays and loans in terms of microfinance will enable small businesses to restart the livelihood of farmers dependent on agri-livestock industry. Farmers are the most vulnerable to a potential economic shock from the lockdown - the agriculture industry contributes nearly $265bn to GDP. Due to the entire supply chain and logistics logjam currently, farmers are the worst hit as they cannot sell their produce and exports have dried up, getting adequate price vis-à-vis their investment has turned zero at the moment.

For short term there will be business losses in SME and unorganized sector due to financial and migrant labour problems and government intervention would be critical to help this sector for another 6-12 months. Overall India will be the gainer in long term if Indian Industry and government take proactive steps in term of promoting FDI for industry and adopting the 17 sustainable development goals of UN. Hon’ble Finance Minister has already announced $22bn (£19bn) bailout for the country’s poor to help counter the economic effects of the Covid-19 outbreak and it is a welcome move. This will help for India's vast informal sector, which constitutes a large part of its workforce. The lockdown and social distancing have left many of them with no viable means of getting any steady source of income. Hon’ble Finance Minister has announced INR 1.7 trillion stimulus that included free food grains and cooking gas to poor for three months, and cash doles to women and poor senior citizens as it looked to ease the economic impact of the nationwide lockdown. I believe it is a positive move towards ensuring the nutritional security of the people below poverty line.

However, a new world order is something we expect post the COVID crisis. New jobs will also get created in various industries which will be much more in demand post the lockdown ends, new emerging business in healthcare services, Pharma, Tele medicine, ecommerce, social commerce, eLearning, online office solutions, robotics and drone based logistics, specialized IT Services for global as well as domestic clients, organic farming, manufacturing for domestic as well as global clients will boost and guide companies to further invest in Make in India.

We are all waiting for the curve to flatten including the Government, but as equal stakeholders I believe it is the right time to shift from an economy focused on aggregate GDP growth to differentiate among sectors that can grow and need investment. Increase investment in critical public sectors, and clean energy, education (both offline and on online based platforms which have gained significant traction during this pandemic) and most importantly improve testing labs and make substantial investment in healthcare sector. There needs to be considerable reduction in consumption and travel, with a drastic shift from luxury and wasteful consumption and travel to basic, necessary, sustainable future, we need to welcome the New Normal that will be more self-reliant, more civilised, inclusive and more social but by maintaining privacy and adequate distance.