April 19, 2020
As the country puts(New idiom for businesses after Covid-19 meltdown) in the best of efforts to flatten the curve, India Inc needs to brainstorm on strategies as there is a good possibility of reoccurrence of the virus. Indian business ecosystem has never been in the throes of this unprecedented lockdown. The intermittent shuttering of industrial units should goad our industry captains to reboot plans to sail through turbulent weather.
On the investments side(New idiom for businesses after Covid-19 meltdown), India is favourably placed. We are among the least battered of countries hit by the pandemic. This is an opportunity to draw foreign capital by creating a congenial ambience for willing investors.
The past decade has witnessed the flight of foreign capital, especially in the mining sector. The post-Covid-19 scenario(New idiom for businesses after Covid-19 meltdown) offers an opportune moment to reverse this trend and get the investors glued to our success story.
China has faced a barrage of attack for its under-reporting of data on Coronavirus casualties. Most likely, the Middle Kingdom will be bombarded with a wave of economic backlash from the USA.
Companies aware of the repercussions have already started pivoting away from their manufacturing bases from China. Indian business owners(New idiom for businesses after Covid-19 meltdown) also need to align their strategies with these changing geopolitical business priorities.
Discretionary spending will never be the same again especially in the months ahead. Health and safety would top the agenda of individuals. The ticket size of spending will drop.
People will show a proclivity for cheaper goods or defer spends. The digital economy will accelerate as people will root for online studies and home entertainment.
Indian economy(New idiom for businesses after Covid-19 meltdown) is bound to take a severe pounding. The stimulus packages for bailing out business will further strain the depleted government finances.
The economy was already in a state of slump– our GDP growth had sunk to multi-year lows. Each week, the government earns $70 billion in taxes. As Covid-19 induced lockdown has shuttered business of all scales, the loss to the exchequer is humongous.
Indian economy(New idiom for businesses after Covid-19 meltdown) is currently valued at $3 trillion and by some estimates; it could take a hit of $1 trillion owing to the deadly pandemic.
For the real estate sector sitting on a huge inventory, this will be a critical phase. The industry is highly leveraged with low margins. The unsold inventory may no longer be treated as an appreciating asset.
Also, the sharing and co-working spaces could be hit as more businesses try to have their own smaller space with a count of Work from Home (WFH) employees going up.
For financial markets, the results will be a mixed bag. Some companies will grapple with value erosion yet others in the same sector will see value accretion. Highly leveraged companies with thin margins will find the going tough. The best bets will be on no debt, high margin companies.
The situation is likely to create new unicorns in cybersecurity, cloud services and online education services. As of now, it’s a mild U curve for the Indian economy but there is more pain ahead.
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