Two years of pandemic has changed the way many Indians make a living
IT WAS THE BEST TIME, it was the worst of times. The story of two Mukesh is proof of this. The first worked as a caretaker in one of the many high-rise condominium buildings that dot Gurugram. The first outbreak of Covid-19 in the spring of 2020 surprisingly did not affect it, as the residents’ association offered all caretakers additional compensation.
But everything became a bit too much for him after a few months. In addition to the long working hours, there was the fear of infection. Then one fine day, his contractor lets him go, citing budget cuts. Mukesh has worked in temporary jobs since then, with frequent spells of unemployment in between.
The other Mukesh is a Mumbai businessman, who has spent much of the past two years striking business deals with global tech companies and pivoting his oil conglomerate from retail to technology and technology. renewable energies. He has added Rs 163 crore to his already immense wealth every day since the start of the pandemic.
“There were two distinct sides: one fell and the other went through the roof! There wasn’t really an in-between,” said celebrity chef Sanjeev Kapoor, whose business interests range from restaurants and food chains to cookware and nutraceuticals. “So it really depended on what side of the fence you were sitting on.”
Of course, two years of pandemic did not create these two Indies, but it did make them wildly divergent. “The series of massive disturbances over the past [two years] have tested the resilience of the Indian people, their businesses and the government,” said Rumki Majumdar, economist at Deloitte. “Growth varied by sector. A few sectors have weathered the pandemic well, such as IT and technology, chemicals, agriculture and pharmaceuticals. A few rebounded after the easing of restrictions on mobility, such as manufacturing and construction. Those that required social contact continued to struggle, such as hospitality and travel.
As the nationwide lockdown – announced on March 24, 2020 – brought the country to a standstill and brought the economy to its knees, the government quickly realized its folly and recalibrated, allowing business activities to be allowed until at the peak of a deadlier second wave in April and May 2021. Yet through it all, some curious patterns have emerged.
While the entire nation was confined indoors, digitalization has gained momentum, with everything from work (video calls and webinars), education (online courses, edtech), finance (UPI , fintech apps), entertainment (OTT and mobile internet) and shopping. (e-commerce and hyperlocal delivery models) to medical consultants who connect online. Companies in the digital arena, or those that were fast with some digital dexterity, fared well, while those in brick and mortar, especially smaller companies, were hit hard by the ‘new normal’ .
Pent-up demand (and also thanks to all the extra savings accumulated during the months of lockdown) has seen a surge in consumer demand, although businesses have found themselves trying to meet it due to a mishmash of the supply chain around the world. The government tried to help with a series of stimuli. “Timely government interventions to boost liquidity and reforms such as easing of regulations, production-linked incentive program and several other bold reforms have boosted optimism,” said TV Narendran, Managing Director of Tata Steel.
Although these reforms excited India Inc and were dubbed Liberalization 2.0, they appeared to be aimed at sweeping away bold long-term reforms that would otherwise have faced opposition, rather than providing immediate relief.
A LocalCircles survey of 6,000 MSMEs and startups last year found that more than half planned to close shop or scale back business as a result of the pandemic. It is clear that the very face of the economy is changing in favor of big business. “Yes, business would have shifted to more organized players; it’s good for the economy,” said Siddhartha Gupta, CEO of Mercer Mettl, one of the largest corporate HR companies in India.
After the Armageddon of the initial lockdown, the labor market may be reviving, but it is still far from robust. And, worryingly, unemployment has risen. It was around 8% last month, down from 7% in November, well above the pre-Covid average of 6.3%.
However, business leaders point to the large economic recovery expected and how this would dampen the current employment scenario. “More than 50% of employers say they will increase their workforce in 2022,” Gupta said. “And if there are job losses in the physical space, jobs are being created in the same space by digital business models.”
The concern is the combined effect of high unemployment and high inflation. “India is an inherently supply constrained economy. Rising inflation tends to erode demand which is already affected by the pandemic,” said Sangeeta Dutta Gupta, Associate Professor, School of Management, BML Munjal University. Headline wholesale price inflation rose above 14% last month, the highest since 1991, according to the Department of Commerce. It could soon spill over to retail, to the point where we consumers are being affected.
The divergent paths taken by the two Indies mean that Indian businesses are excited about the future. Even the fear of Omicron does not worry the big companies which have embarked on a consolidation frenzy. “The main economic indicators have improved considerably and the economy has started to perform better than before Covid,” said Pradeep Multani, president of the PHD Chamber of Commerce and Industry. “The Knockdown Effects of Omicron [may have an] impact on some of the main economic indicators caused by financial market volatility [but] the reforms carried out by the government over the past two years would provide great support to the economy and mitigate any economic impact of new variants. Whether this will give an equal and fair boost to both Indies (and both Mukesh) remains to be seen.