WHY ARE YOU AFRAID OF THE ECONOMY?
These are tough times and there is a slowdown in worldwide economy, and there are rumours at play that is trying to make a mountain out of a molehill. Some of these rumours are from educated minds that suggest a prolonged chronic economic turmoil, but these are just blown-up speculations of a pessimist. There is no doubt that the economy will be impacted greatly across the world. The pre-Covid GDP projections are impossible but there will be improvement after lifting the lockdown across the world.
Let us analyse the current situation from the perspective of an ordinary man
The world we live in is robust and constantly innovating itself and it will find a solution in the near future for the COVID pandemic too and once that is done, every small and big business shall go on in full swing. It is a reality that we might take a few months to get where we were before the pandemic, but it is not going to be so tough for our country which is built on strong democratic and economic foundation prominently based on agriculture. Our sustainable economy consist of major exports of processed petroleum by-products, precious stones, pharmaceuticals, textiles and related products, agriculture products including spices, leather products, software and related service sectors. Out of these, precious stone, leather goods or similar luxury products will suffer the most and the rest including real estate , automobile are going to come out stronger than most of the nation’s due to the REPO rate cut by RBI. Subsequently interest rate for Housing sector became lowest in last 25 years of Indian Real Estate history. We all know how the crude oil prices have dropped all across the world due to the drastic drop in consumption. It will surely bounce back as soon as the countries open up after the lockdown. Similarly agriculture related products, pharmaceutical and textiles are essential necessities. After some time these will regain momentum too. Looking at our agricultural exports which is the back bone of the economy, things are looking bright as the forecasts for this year's monsoon is on right track. We are in a standstill for the time being, but with our economic core intact, we will get over this easier than most developed countries. Oil related products are inevitable to roll the world and even in the current scenario, we see that the business in few countries in Europe and most of the states in the US will be open soon. Thus the GCC shall also bounce back within no time once they restart the oil productions.
The present scenario may be compared to the massive main engine work of a ship. Before sailing, when the Engineers get their instructions, they prime and warm up the engines for some time and slowly the ship pulls off from the dock and she heads to the open sea with a safe speed and once she reaches the open sea, gradually the speed is increased and proceeds to next destination. Similarly as soon as the Covid crisis is tackled, the world will bounce back and fight together to make up for the lost time and revenue. Look at China, after they got control on the epidemic, they opened up the country except for tourism and they are eagerly waiting for world market to open to penetrate.
Definitely there will be a void in the economy due to the lockdown and subsequent unemployment of labor class and salary cut of employees etc. To fill up this void, most of the countries including our nation is doing their best to support the affected class. Individual and business class urge to get things moving and the government is also fully on board with stimulus packages and other aids to deliver a speedy recovery to the economy. But the tourism and hospitality related business and luxury sectors will take much more time to recover.
It is worth looking at the post World War 2 scenario. There was total destruction of the entire Europe, regions of Mediterranean, Baltic and most of the Asian countries. Estimated fatalities were not less than 6 Cr to 8 Cr or more. Towards the end of WW 2, almost all these countries were ripped off literally with no infrastructures or any facilities left including food, water, clothing and also no hospitals to treat even the soldiers and war victims. The estimated financial losses (current value) were around Rs. 300 lakhs Crore. But naturally, the entire world slowly recovered from that horrible situation. When we compare the Covid crisis with WW2, it is no match at all.
What is happening around us is happening all around the world. Everyone is waiting for a time after the crisis. Everyone has just put their dreams on ‘pause’ for now and is eagerly waiting to start from where they left. It is just like a football game-when the whistle blows, after 45 minutes all the players clear the ground and discuss the strategy and plans to win the game and after 15 minutes when the whistle blows all the 11 x 2 players take their positions. Similarly once this crisis gets controlled, each one of us know where to start and you have to have all the players onboard in order to get going and play the game fully. I mean to say job loss and other related issues is only temporary.
T A Joseph
MD & Founding Director - Confident Group