How does Akshay Kumar keep this body upright?

Category: Thought leadership

"Helicopter money" was coined by Milton Friedman in 1969 to explain the effect of monetary policy on inflation. Today we see helicopter money practically in front of our eyes as the US Federal Reserve pumped trillions of dollars into it to combat the economic crisis caused by the Covid-19 pandemic. Other countries also seem to be following this example. While printing money and distributing it to the population seems like an obvious and quick fix to dealing with the crisis, the way this pandemic ended does not guarantee any certainty. Although the virus is not very fatal, the recovery time is anywhere from 12 to 28 days, depending on the severity of the case. This has left health facilities overwhelmed with the best health systems, even in some of the most developed countries. Little by little, almost all countries have put in place a full lockdown to flatten the curve and disrupt the chain of transmission of the virus. India also has on25. A ban was imposed on March 20, 2020 until3. May 2020, and a decision to lift the lockdown by the central government is pending.

Although many expected fiscal stimulus from the government to prop up the tumbling economy, the government has still not disclosed its post-shutdown recovery strategy. Though throwing money out of the helicopters, like other countries, might be an option, it might not help the economy in the long run, especially considering Covid-19 has been here for a longer time than we expected. I firmly believe that printing money will not solve a problem stemming from a virus that is forcing people to stay indoors. This is a good opportunity for India to come up with an innovative plan and restart the economy with the following steps for the benefit of all:

1) A reward for living

This lockdown brought the plight of migrant workers to the living rooms of India for the first time. With heartbreaking videos and photos of people going home with their children and many unfortunate incidents of people who have died as a result of the hardship, the mirror has been held up to Indian society. These migrant workers who built the metropolises of India are unable to find a place for themselves in the same cities. The minimum wage in India starts at around 5000-6000 rupees a month and varies from state to state. It is high time the government adhered to the definition of a living wage that provides a family with basic needs such as food, water and shelter as well as education for their children, health care and insurance. It will really care about the people at the bottom of the pyramid and bring in the much-needed liquidity when the minimum wage ceiling is raised to Rs 21,000 a month, as done by the7. This will also ensure that the money flows through the industry in a legal manner and reduce the incidents of leakage. It is time we respect the hands that built this nation. In the short term this may be a little painful as the industry is suffering from losses, but it will have a positive ripple effect.

2) Take up Gandhian ideas

Gandhi Ji always advocated the idea that villages should be self-sufficient. The Covid-19 pandemic will fuel the flames of de-globalization, and until a vaccine or safe drug is found (it could also be herd immunity), global markets will not function as they did before the covids. We have already seen the US canceling immigration applications for the next two months. Since the outbreak is taking place in different parts of the world, it is advisable to create alternatives and rethink the global and widely ramified supply chains. Fortunately, because of its size and population, India can be self-sufficient by producing and consuming its own goods. Based on the news and cases, it can be assumed that rural India has so far been spared the Covid-19 pandemic. It is time we started making village clusters self-sufficient through the decentralization of small and medium-sized industries in hinterland India. The migrant workers have returned to their homeland and those who are stuck would like to return to their homeland. Armed with this workforce, cutting edge technology and cheap capital provided by the banks, the village clusters can host industries that can become the new engines of the economy to advance the country in a post-Covid world. India today is very different from India 30-40 years ago, as road infrastructure, railways, internet and electricity have now invaded many parts of the country. These industries will help with import substitution, promote "Make-In-India" and can also be integrated with "Skill India" to develop a highly qualified workforce. With industrial clusters like this, pressure on the supply chain will also ease and in times of closure or an outbreak we will be able to support ourselves and create quality jobs in rural India.

3) Robotics Push

We have heard again and again from different corners that the infrastructure in India has to be advanced. While we don't need to advocate shifting the focus away from infrastructure, we need to look more forward if we are to revive the economy from the effects of Covid-19. If we open up our economy and let the factories and warehouses run, things cannot go on in the old way because people have to maintain reasonable social distance. This will limit the capacity utilization and reduce it by 30-40%, together with other measures such as sanitization etc. it will affect the margins of the companies. We have also seen that, in view of Covid-19, it makes enormous sense to reduce the number of touches and contacts for products. here we can Robotics and automation play a big role in helping the industry run 100% of its manufacturing facilities and warehouses and meet demand without impacting margins and productivity. In hospitals, too, robots can help with contactless deliveries and protect medical staff from undesirable stress. Be it monitoring or shipping critical material over the last mile, or assisting material movements in hotels, airports or train stations, robots will help humanity in this war on the virus and India should seize this opportunity with both hands. Encouraging such investments in robotics through inclusion in priority lending or granting tax breaks and exemptions will help drive adoption quickly and not only make our supply chain exceptionally reliable and resilient to such shocks, but also create quality jobs. Just like the Ministry of Atomic Energy, a separate department should also be created for robotics and report directly to the Indian Prime Minister.

4) Take advantage of the Land Bank

As Dharavi has become a hotspot for the Mumbai outbreak, it has made a compelling case for relieving pressure on our metro cities and providing affordable homes for workers. The public sector undertakings are sitting on huge land reserves. With renewed vigor, these plots of land should be used quickly to build affordable homes for families below the poverty line and provide them with a good standard of living with all basic amenities. This can be done by the government itself or in partnership with private companies. A clear and transparent process will ensure that unnecessary delays in the form of injunctions and legal proceedings are avoided. This will stimulate the infrastructure-related sectors in the country. As traffic and other disruptions are low, ongoing infrastructure projects such as subway, rail and highways should be promoted while respecting social distance and safe work standards. This will help us complete these critical projects sooner and save ourselves critical opportunity costs and interest costs on capital.

5) Short term financial balm

While the government has urged industries not to lay off workers, industries are finding it increasingly difficult to manage labor costs. While helping industries is important, it's imperative that unscrupulous business leaders don't get away with bad decisions under the guise of Covid. More than 6.5 lakh people have dug into their PF savings to offset the loss of income from the Covid-19 lockdown. It would be wise to do so by the government26. Rethink the PF benefit for industries announced on March 8, by adopting employer and employee contributions for all industries, regardless of the size of the industry, for all employees with taxable income up to 10 lakhs for the next three months. The ESIC contributions for the next three months can also be borne by the government. This will help companies reduce their personnel costs. Industries can get help in the form of deferred taxes, electricity charges, leases and rents for three months. The duration can be changed for certain industries, depending on the impact of Covid-19. These incentives should be linked to the reservation not to reduce employment during the pandemic. Companies can also debate with employees and focus on making wage cuts rather than layoffs. High leverage companies will still have liquidity problems and some companies will still remain below their means. These companies can be granted short-term, interest-free lines of credit from banks to cover their labor costs and some fixed costs, provided they do not carry out mass layoffs.

Covid-19 has brought the glaring gaps in our health system to the fore. Needless to say, we need to improve basic health care in our government hospitals across the country. This should not be viewed in terms of economic gain or loss, as our Prime Minister said, "Jaan hai toh Jahaan hai". We have overcome previous crises and I am sure that we will also overcome this crisis in time. The economy will restart with a button and a simple press. It will certainly take a lot of effort and perseverance to get her back on her feet. But I'm sure of one thing: sooner or later everything will be fine, and the human mind will overcome this challenge too.

Posted in Thought LeadershipTagged Automation, Covid 19, Economy, Finance, RoboticsLeave a Comment on Covid-19: The Economic Reset