Economy : The Way Back

Economy  :  The  Way  Back

On 25^th March, when FM Smt Nirmala Sitharaman announced a Relief Package of Rs 1.7 lakh crore ( approx. $ 22 billion ), she may not have reckoned with the possibility of the lockdown getting extended beyond 14^th April

Hence , that package was more like a BAND-AID on a body-scratch

But now with a consensus emerging about extending the lockdown ( although, in a phased manner ), quite possibly we are facing a DEEP WOUND !

And obviously , that $ 22 billion package just won’t suffice, for an economy where ( according to a recent news ), our daily GDP is approx. $ 8 billion ! –  a package worth 3 days of GDP !

There are two sides to any economy : 

The Demand side and the Supply side

For the fabric of economy, these are like WARP and the WEFT of threads .

If one of these threads gets damaged, the entire fabric starts unraveling !

In the Relief Package, there was very little for the factories / workshops , which produce the GOODS ( the SUPPLY side ) . Following are the main features of that package :

Ø  About 800 million people will get free cereals and cooking gas

Ø  Cash through direct transfers for three months.

Ø  Rs 1,000 ex-gratia payment to nearly 30 million poor senior citizens, widows and disabled

Ø  Insurance coverage of as much as Rs 50 lakh each for about 2 million healthcare workers battling the disease.

Ø  Relief to construction workers

Ø  First installment of Rs 2,000 under the Pradhan Mantri Kisan Yojana will be frontloaded to reach 87 million farmers in April.

Ø  Increase in MANREGA wages from Rs 182 to Rs 202 per day

Ø  Rs 500 / month to 200 million women Jan Dhan account holders for 3 months

Ø  Rs 20 lakh collateral-free loan to women SHG ( Self Help Groups )

FOR ORGANIZED SECTOR :

Ø  Govt to contribute EPF to companies with less than 100 workers

Ø  Contribution for both employer and employee

Ø  Non-refundable advance of 75 % or 3 months’ wages, from PF account

There was no way , such a pittance could help generate “ DEMAND “

In the meantime, with factories closed , SUPPLY has just stopped !  Inflation has started !

To balance both , we need :

Ø  Workers to return to factories and re-start the machines  –  SUPPLY side

Ø  People to start working / earning  wages / start buying things – DEMAND side

In short, moving from a STANDSTILL economy to a SWINGING economy

But , with a GRADUAL lifting of lockdown, such a move will also need to be GRADUAL as follows:

Ø  “ Few Machines Working “ to “ Some Machines Working “ to  “ All Machines Working “

Ø  “ No Supply “ to  “ Some Supplies “ to  “ Full Supplies “

  

Ø  “ No Purchasing Power “ to “ Some Purchasing Power “ to “ Consumer Disposable Surplus “

Ø  “ No Buying “ to  “ Some Buying “ to  “ Buy All You Need “

While such a GRADUAL SHIFT takes place over a period of next 12 weeks , here is what Government should do to make this SLOW TRANSITION, as painless as possible :

Ø  For 2020 – 21 , only 50 % of the Personal Income to be taxed for individual tax payers

{  Revenue loss =  Rs  3 lakh*Crore }

https://www.indiatoday.in/business/budget-2020/story/govt-stares-at-tax-shortfall-of-rs-2-lakh-crore-room-for-personal-income-tax-relief-limited-1640397-2020-01-27

Ø  For Corporate, 25 % of salaries/wages paid during July – Aug – Sept , to be borne by Govt

-  Only to those Corporate , which implement by end-May , Mobile based Attendance System as described at :

          From BAD to MAD                   [ 01 June 2016 ]

          MAD goes to Mandi                  [ 02 Jan 2020  ]

 

Ø  Amounts of donations made to PM-CARES fund to be treated towards CSR obligations with provision for carry forward any excess amount

Ø   No GST for goods sold during July – Aug – Sept ( assuming production will reach normal level by June end )

{  Revenue loss =  Rs 3 lakh*Crore }

Ø  Since above-mentioned benefits will drain the government exchequer, leaving very little funds for planned Infrastructure, I strongly urge the Government to issue  ELEPHANT BONDS , with modifications as described at :

              Congratulations, Shri Surjit Bhallaji,            [ 31 Oct 2019 ]

Only yesterday, EU countries have started debating issue of CORONA BONDS to help out the countries worst affected by this crisis ( viz: Italy – Spain – UK – France )

QUESTION :

As far as India is concerned, the Government is faced with a “ Trade-Off “ between :

Ø   
     Saving lives through a gradual / phased out lifting of lockdown,  

     

    AND

Ø   

    Getting back to NORMAL economic activities , as fast as possible , with minimum   hardship to citizen

QUO VADIS ?  Which way should we take ?

I hope , following diagram will help our Policy Makers to quantify the PROS and CONS of each of their alternatives

With regards

Hemen Parekh

09 April 2020

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Antidote to “ Anti-Social Intimacy “

Antidote to “ Anti-Social Intimacy “

[ aka……Continuation of  “ Social Distancing “ ]

It seems Governments ( Central + States ) are veering around the thinking that it would be too risky to lift the lockdown totally on 14 April .

There seems to be acceptance of the CONCEPTUAL  FRAME-WORK  that I suggested in my following emails re a gradual lifting in a phased manner

Sources for my suggestions :

Ø  Unlocking Lockdown : Calibrated – Gradual                                            [ 04 April ]

Ø  Not so ODD after all !                                                                            [ 01 April ]

Ø  Thank You , Shri RaviShankar Prasadji                                                    [ 02 April ]

Ø  Mobiles for Tracking Corona Movements ?                                             [ 23 March ]

Sources for News Reports :

 

Ø  Beyond the Lockdown                                                                           [ 6^th April ]

Ø  Restrictions May Continue Beyond April 14, Lockdown Only for Coronavirus Hotspots One Option: Govt Sources                                                                     [ 6^th April ]                            

Ø  Exit scenarios proposed: All 11 Covid-19 panels support gradual lifting of lockdown  …[ 7^th April  ]

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GENERAL

My Suggestion :

Such explosive “ Return to Normal “ could prove disastrous [ consequences with unknown risks ? ]

I urge the authorities to “ swing the pendulum slowly , gradually “

News Reports :

Several states have written to the Centre saying that the restrictions must continue

Another proposal that the government is considering is to lock down only the Covid-19 hotspots, and not extend the nationwide lockdown. The health ministry has identified at least 20 virus hotspots across the country and another 22 potential hotspots

“ If cases continue to rise, then there may be no option but to extend the lockdown.

“It could be extended in Mumbai and urban areas of Maharashtra by two weeks,” Rajesh Tope, the health minister of Maharashtra, told Reuters.

All the 11 empowered committees constituted to suggest ways to tackle different aspects of the Covid-19 crisis have favoured a gradual lifting of the lockdown

One of the proposals was to divide the country into three zones – green, yellow and red – depending upon exposure risk to the disease. Green zone, the safest, could be opened up to most of the core economic activity; in yellow zone, production could start at a small scale; and red zone, or areas significantly impacted by Covid-19, should continue to be in lockdown for some more time

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TRANSPORT

My Suggestion :

Spread over April to Dec , vehicles permitted :

Bicycles > 2 Wheelers > Trucks > Private Cars > Intercity Buses > Intercity Trains > Planes > City Buses > Ferries > Local  Trains-Metros > Cruise Ships

Odd / Even for all passenger vehicles ( with usual exemption for Police / Ambulance etc )

     Each vehicle ( includes planes ) to carry no more than 50 % of capacity.

News Reports :

If the airport is opened up, every person exiting the premises will be fully screened.

Metro services will be restored in Delhi but with entry restricted only to office-goers, and after body scans.

Airline travel might resume but visits to and from foreign countries will e permitted only under special circumstances. There will be special advisories to avoid inter-state travels.

Train services may be resumed, but only for essential travel

everybody agreed that international travel should continue to be suspended even as the gradual exit begins

local air travel could begin with certain standard operating procedures.

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OFFICES-BANKS

My Suggestion :

No of persons permitted to work inside these establishments shall be restricted as follows :

April >  less than 10 persons / July > less than 50 / Sept > less than 100 / Nov > less than 500

In rotation , 50 % of the employees to work in office and balance 50 % from home ( WFH )

5 day week( currently prevalent ) to become a 6 day week ( to distribute work-load evenly )

Staggered work-hours through Flexitimings [from 7 am to 10 pm/shift working in offices ? ]

Change over from Bometric Attendnce System to Mobile-based Attndance System

News Reports :

Offices where work from home is possible will be requested to extend it for another month.

Offices will be allowed resume functioning, but effort will be made to make them call minimal staff. At least half the staff can continue work from home

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FACTORIES – WORKSHOPS

My Suggestion :

No of persons permitted to work inside these, shall be restricted as follows :

April > Less than 5 / May > less than 25 / June > Less than 50 / July > Less than 100 / Aug > Less than 500 /  No limit

Greater sub-contracting ( outsourcing ) to reduce manpower in one shed

Grater mechanization / automation

Outsourcing of simple components / assemblies could be considered for employees

willing to retire earlier

Big factories themselves may breakup into smaller, geographically dispersed locations

News Reports :

? 

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SHOPS – MALLS

My suggestion :

April > Only E Com companies / June > Kiranas / July > Veg Mkts / Aug > Small Malls / Oct > Med Malls / Dec > Large Malls

Drone-based deliveries need to be accelerated

Govt will be forced to relax rules / regulations governing E-commerce , so that people do not need to leave their homes for shopping

 

News Reports :

Malls will be open but only for selling essentials

The Delhi government, meanwhile, has decided to keep malls, multiplexes and congested markets such as Chandni Chowk, Lajpat Nagar and Sarojini Nagar closed. Only shops selling essential goods will be allowed to remain open. 

Delivery of essential services will continue but the nationwide ban on public congregations will remain…. The ban on weekly markets will apply only to areas most affected by the Covid-19 outbreak.

On retail side, one proposal was to keep retail shops open on a rotation basis on different days, sources said.

A counter view was that instead, certain number of shops in a locality should be allowed to remain open for a few hours at a time and the hours should be 24/7, implying that retail is available round the clock as this would avoid crowding out in the markets

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MONITORING  QUARANTINED  PERSONS

My Suggestion :

Dear Shri RaviShankar Prasadji / Dr HarshVardhanji 

Ø  Hold in abeyance for ONE YEAR, proposed

          #     DATA PROTECTION LAW

          #     E-Comm Policy

Ø  Make CENCUS / NPR , a pure Mobile App based exercise ( with 24x7 dynamic / continuous UP-DATING by citizen from privacy of their homes ( No need for 33 lakh enumerators to increase the probability of spreading Corona Virus, by visiting millions of homes

Ø  Immediately phone up Prof. Ramesh Raskar { MIT } and implement Mobile App developed by his team, by issue of an appropriate ORDINANCE , to be converted into a  Infection Protection Act , within 6 months

  

News Reports :

Monitoring quarantined persons using GPS trackers, though it is not clear right not how this will be done, whether through smartphones or via a wearable device.

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RELIGIOUS  PLACES

My suggestion :

April to June >  NONE  / July > Street Corner / Aug > Small / Oct > Medium / Jan > Large Places

Limits will need to be fixed for number of devotees that can gather together at a time

eg : Aarti – Namaaz – Discourses – Shivirs etc ). For such occasions, there will be “ No Standing “ but only chairs kept 2 M apart

Installations of CCTV to grant “ Video Darshan “ to devotees from outside the place

Greater use of Online darshan/participation through singing, using video mobile apps

 

News Reports :

….Religious places too might stay shut

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SOCIAL  VENUES

My Suggestion :

April > Less than 20 at HOME  / June > Upto 50 in HALL / July > Less tan 100 in HALL / Sept > Gardens / Oct > Beaches / Nov > Resorts

News Reports :

No parties or gatherings will be allowed. Marriages, birthdays or any kind of celebration will not be permitted.

People will not be allowed to come out in the public without masks, either bought from a medical store or home-made or folded scarves or other pieces of cloth. 

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EDUCATIONAL  INSTITUTIONS

My Suggestion :

April > Less than 10 in Coaching Classes / June > Less than 50 in Coaching Classes / Sept > Colleges – Hostels / Nov > University Campuses

Institutions will be required to work in 4 shifts of 6 hours each

A few years down the line, not only Video-based impartation of teaching will happen but VIRTUAL CLASSROOMS ( using holographic projections ) can take place in each home

News Reports :

Admissions, classes and examinations in schools and colleges will be made online

Schools will remain closed, online classes will continue to run as they are at present.

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ENTERTAINMENT  VENUES

My Suggestion :

April-May – June - July – Aug > NONE

 

Sept > Less than 200 in Cinema Halls

Nov > Less than 500 in Stadium / Dec > less than 1000 / Jan > Less than 5000

Feb >  Open Sports Ground

Drastic reduction in number of viewers admitted for a given show / event

Govt should grant permits to event organizers to steam such events LIVE on TV or Internet , by collecting subscriptions ( event-wise or month-wise )

News Reports :

Cinema halls, food courts, restaurants and religious places too might stay shut

Covid-19 hotspots like Nizamuddin and Dilshad Garden will continue to be under lockdown.

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Dear Shri Narendrabhai,

Early implementation of  “ Social Distancing “ through lockdown has managed to save thousands of lives and millions of infections

Rest of the World followed India – albeit too late

Now , once again , countries of the World are waiting to see what India decides

It is our opportunity – and a moral obligation – to lead the world by setting an example , even though it will mean continuation of hardship to millions

But , at this point , saving LIVES is more important than saving LIVELIHOODS

With regards,

Hemen Parekh

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07 April 2020

hcp@RecruitGuru.com