A PROJECT ON THE EFFECT OF LOCKDOWN ON ECONMY AND

JOBS.HOW TO SURVIVE AFTER LIFTING LOCKDOWN.

BUDHA HIMASEKHAR

ROLL NO : 13

Coronavirus Lockdown :

How serious could the impact be on Indian economy and GDP:

 To an economy passing through demand depression and high unemployment, the

lockdown would add supply-side stress, accelerating the slowdown further and
jeopardising the economic wellbeing of millions.

 It does not require an economist to tell that a complete social and economic
lockdown of India for 21 days
would severely impact the supply
side of the economy, that is,
production and distribution of
goods and services, except for the
essential items that are exempt.

 In an economy already reeling

under a demand depression, rising
unemployment, and lowering of industrial output and profits, all of which
happening together for several quarters now, a supply-side constraint would
deliver a big blow, jeopardising growth prospects and social and economic
wellbeing of a large number of people.
 The quarterly GDP growth has consistently fallen since Q4 of FY18. If there is a
deviation in Q4 of FY19, as shown in the graph below, it is because the National
Statistical Office (NSO) revised its data on February 28, 2020, drastically cutting
down growth rates in the first three quarters of FY19 (from 8% to 7.1% for Q1;
from 7% to 6.2% in Q2 and 6.6% to 5.6% in Q3).

 What could be the magnitude of the impact of a complete social and economic
shutdown may not be easy to estimate, but it is likely to be far more severe than
either the 2016 demonetisation or the 2017 GST rollout.Nobody now disputes that
those two events delivered economic shocks from which the economy had not yet
recovered when the coronavirus pandemic struck.

 Little foresight or preparations for country-wide lockdown

 The similarity with the 2016's demonetisation or 2017's GST does not end at their
economic impact.The blow to people and businesses could have been considerably
softened but for lack of foresight, planning and strategies. That would have saved
a mad scramble by the government too.For example, Finance Minister Nirmala
Sitharaman announced Rs 1.76 lakh crore relief package on March 26 afternoon, a
good 42 hours after the 21-day lockdown was announced. It would largely benefit
the unorganised sector workers, especially daily wage workers, and urban and
rural poor. The relief would include cash transfers and PDS (Public Distribution
System) supply.

 This was followed by the Delhi Chief Minister Arvid Kejriwal's assurance to street
vendors, petty traders, and shopkeepers that curfew passes would be provided to
them online to prevent their harassment at the hands of cops.

 All these steps could have been taken before the lockdown was announced,
particularly since the March 24 announcement succeeded a 'Janta curfew' of
March 22 and a "complete lockdown" of 548 districts a day earlier.
The aftershock of sudden lockdown is visible:

 For one, people rushed into provision stores, making a mockery of 'social
distancing' which is the primary goal of it. Secondly, a day after the lockdown,
online suppliers of grocery, medicine and food, like Amazon, Flipkart, Bigbasket,
SuprDaily and many others, suspended their services across the country, citing
"confusion" or "restrictions imposed by local authorities" on their movements.
Others, like Grofers and FreshToHome, complained of official obstructions.

 Two days earlier, another online supplier Milkbasket had stopped delivery
services in seven Indian cities saying that it was not being allowed to deliver milk
and vegetables, "resulting in us dumping 15,000 litres of milk and throwing over
10,000 kg of fruits and vegetables".

 The harassment didn't restrict to them alone. Cops were seen beating anyone and
everyone moving on the streets in many cities across the country, the video
evidence of which is circulating on social media. There are instances of cops
attacking provision stores in markets too, even when the essential services are
allowed during the lockdown.

 It was only after several senior state and central government officials stepped in
that the prospect of supply of essential services improved. But with trains and
trucks also banned, how long their supplies would last is anybody's guess.

 The shutdown of planes, trains, and bus services had caused people to rush into
airports, railway stations and bus stands, again making a mockery of social
distancing. It had another consequence. Inter-state migrants were seen walking
hundreds of kilometers with women and kids in tow to their homes because there
was no transport and no work.

 There was no food or money to buy food for many daily wagers. In Delhi, for
example, thousands of daily wagers crowd shelter homes set up by the Delhi
 government to provide them food, again making a mockery of social distancing.
Business Today estimated that about 300 million informal workers could be
vulnerable and seeking help.

How the lockdown would impact the economy?

 Business Today reached out to two eminent economists with decades of

experience in dealing with the Indian economy, Pronab Sen and C Rangarajan, to
find out how the lockdown would impact the economy and to what extent.

Here is how the lockdown would impact the economy.

 Pronab Sen says, "At the moment, it is a supply-side problem. Both production
and distribution of non-essentials have come to a halt. This affects at least 55% of
the economy for three weeks or about Rs 2 lakh crore. It may even be larger due to
previous partial lockdowns by various state governments.

 "Now, after the lockdown is lifted, there will quite possibly be an increase in sales
which will be met through existing inventories. This does not, however, add to the
GDP (as these goods and services had already been produced and accounted for).
It may take a few more months for the final production and sales to resume.

 "In the interim, between now and full production resuming, a large number of
people would have been unemployed and not earned any income. As a result, in
the second round, demand-side will become a serious constraint."

 Rangarajan says, "The impact of lockdown will be felt through several channels,
weakening of domestic demand, disruption in supply chain and disruption in
financial market. All of this would result in declining production and retrenchment
of employees."
How serious could the impact be on GDP?

 Sen says, "In FY20, we would be lucky if the growth rate is 3.5% (full fiscal). It
would be a very different scenario for FY21. In the first half, we would be lucky if
the growth rate is zero. In the second half, the growth could revive by as much as
7%, taking the average growth for the year to 3.5%."

 Rangarajan is more optimistic. He says, "The growth rate in FY20 may decline by
0.5% (from 5% that the NSO's first advance estimate says). In Q1 of FY21, the
growth rate will be negative. I don't know what would happen in Q2 and Q3 but
my best estimate for the entire fiscal would be 4%."

Over 136 million jobs are at risk due to Corona lockdown — Here are the
worst-hit sectors.

The outbreak of Coronavirus has disrupted the job market as the nation goes
into a complete lockdown for 21 days.As many as 20 million jobs might be lost if the
tourism industry doesn’t rebound by October, says the Confederation of Indian Industry
(CII).From food products to electronics to cement and ceramics, nearly nine million jobs
may be affected within the manufacturing space.

The outbreak of Coronavirus has disrupted the job market as the nation goes
into a complete lockdown for 21 days. This has triggered fears of large scale
unemployment across thecountry.According to the estimates by the National Sample
Survey (NSS) and Periodic Labour Force Surveys (PLFS), nearly 136 million jobs are on
the line. Going by the unemployment rate before Coronavirus hit the economy, India
needs to add nearly 10 million jobs to keep the working age population employed.

“The implications of this crisis will be dire. We will inevitably have less fiscal
space to make much-needed investments in, for example, education, skills, preventative
healthcare, and infrastructure. This will not just prevent us from moving forward but will
set us back. Our large and growing youth population will be further disenfranchised,
potentially spurring social discord, crime, and instability," Sabina Dewan, the president
and executive director of the think-tank JustJobs Network told Mint.

This will majorly impact the gig economy, contract workers, small businesses —
and also those employed without a legal contract such as casual labourers — who do not
have a fixed take home salary. Over five million Indians have contract jobs which are less
than a year in tenure.

A recent survey by the job search platform Indeed also said that half of the Indian
businesses already trimmed the contractual workforce and freelancers to cut operational
costs. In fact, a third of the companies say they will temporarily halt hiring activities.

TOURISM AND HOSPITALITY :

 Tourism and hospitality are one of the worst hit sectors, after the Covid-19
induced downturn. Most of the countries asked employees to pause travel plans
related and closed borders. Even hotel rooms remained empty all this while.

 As many as 20 million jobs might be lost if the industry doesn’t rebound by

October, says the Confederation of
Indian Industry (CII). That accounts for
over half of the tourism and hospitality
workforce.

 In fact, restaurants already reported a 35%

drop, because of fewer footfalls as
people stay at home, practising social distancing. This has impacted flexi workers
such as guides, restaurant sanitation workers, waiters, suppliers of vegetables and
other raw material to the hotels.Over 9 million jobs impacted in the manufacturing
cluster From food products to electronics to cement and ceramics, nearly nine
million jobs may be affected within the manufacturing space, owing to the plant
 shutdowns, according to the temporary staffing firm Adecco Group. The lockdown
has brought manufacturing and production projects to a standstill. For instance, the
handset manufacturing industry is deep in losses at ₹15,000 crore because of
production delays. “At present, we have a turnover of ₹500 crore to ₹700 crore per
day. So, a shutdown for about three weeks essentially means a loss ranging
between ₹10,000 crore and ₹15,000 crore,” Pankaj Mohindroo, chairman of the
Indian Cellular & Electronic Association of India (ICEA) told ET. ICEA
represents smartphone manufacturers including Apple, Oppo, Lava and more.As
per a report by the Wall Street Journal, Apple seems to be going slow on its
production of iPhone 11 in India.

Automobile sector can lose up to a million jobs:

 Meanwhile, the automobile industry, which has already been through massive
production costs and falling sales for the last year, will also suffer more, thanks to
the lockdown. This will cost the country a million jobs across dealerships,
frontline workers among others.

 The auto industry is staring at losses of over ₹13,000 crore due to forced
shutdowns. That will also impact the economy as a whole since the industry also
contributes around 7.5% to India's overall GDP.

600,000 contractual jobs at risk in the aviation sector:

 Airlines is probably the worst affected sector as both domestic and international
travel has come to a standstill. As per recent estimates, nearly 600,000 contractual
workers are at risk of losing their jobs, especially those in on-ground and support
roles.“Indigo, India’s largest airline, has reported a 15-20% decline in daily
bookings over the past few days, compared with the week-ago period, and expects
its quarterly earnings to be materially impacted,” Kapil Kaul, chief executive for
aviation consultancy CAPA India told ET. IndiGo, GoAir and Spicejet have
 already cut the employee salaries across roles for the month of March — including
the chairman.

Over half of the revenue of the Indian apparel industry comes from exports —
which has come to a halt:

 The pandemic has hit the global supply chain and trade has come to a grinding halt.
Over half of the revenue of the Indian apparel industry comes from exports. More
than a third of the apparel industry export orders are placed from Europe.
According to the Ministry of Commerce, India exported garments worth ₹1 trillion
in 2018-19.Added to that is the shutting down of malls and retail stores due to
lockdown. “With the region being declared the new epicentre for the disease by
the World Health Organization, new orders are bound to be affected. But it is hard
to assess the outcome now. We’ll know in the next couple of weeks,” says Raja
Shanmugam, who is a manufacturer and heads the Tirupur Exporters’ Association.
However, the Confederation of Indian Textile Industry ( CITI) has asked the
government for a relief package for the workers in the industry."Include cotton
yarn and fabrics under Rebate of State and Central Taxes and Levies (RoSCTL),
Interest Equalisation Scheme (IES) and Merchandise Exports from India Scheme
(MEIS) benefits with immediate effect to prevent job losses for lakhs of people in
the handloom, powerloom and spinning sectors,"

On the other hand, telecom, healthcare are the sectors least affected by the
global pandemic:

The telecom sector seems to be rebounding as most of India is working from home
during the lockdown, thereby availing more data services. With more people practising
social distancing, the data usage is expected to surge by up to 15% in India, Quint
reported citing Rajiv Sharma, head of equity research and telecom analyst at SBICAP
Securities.
 While healthcare is at the forefront of battling the Coronavirus infections. The
public health emergency has led to the country prioritising in-house manufacturing of
pharmaceutical ingredients after Coronavirus disrupted the global supply chains —
leading to shortage of medical drugs, face masks, ventilators and more. India said it will
spend $1.3 billion for pharmaceuticals.

Evry individual use this time up to carrier skills:

If you are not worried about your immediate survival in the current national
lockdown, then your next worry is how does this impact your employer and your future.
Like most professionals, your job is and will remain your primary source of income for
the most part of your life and this unprecedented crisis appears to be a major threat in
the short to medium term. If you are not working in essential services, you have less
work during a shutdown, leading to frustration and anxiety. Here’s how you can utilise
the lockdown for a positive impact on your career.

Immediate actions:
As the lockdown proceeds, you will increasingly feel disconnected and
irrelevant, blunting your professional edge and reducing your employability. Thus, your
most urgent requirement is to stay busy and connected with work. Establish and follow
a proactive routine to manage time optimally and get the results you seek. Work
diligently and don’t miss the daily team call routine. Volunteer for additional tasks and
deliver within deadlines. Next, check out online training programs offered or assigned by
your firm and set aside an hour daily to complete them. You will learn new stuff and
keep your brain engaged and sharp. Now, formulate and lead online training sessions on
different skillsets for your junior team members. Finally, create and execute weekly
projects from team goals that were put on the backburner earlier.

Medium term:
If the lockdown gets extended further, make plans for the next 6 months to a
year. Firstly, build business scenarios for a post-lockdown environment along with your
team. How will the market look like? What will be the impact on clients and vendors?
Will they take your services, pay on time or continue to serve you? How will your
answers change if the disease and economic impact is more severe or less severe than
you imagined? Formulate your team’s plans for different scenarios. Secondly, use
lockdown time to map your industry. Research on your competition, suppliers,
customers, key managers in different companies by reading up industry journals, press
releases and public financial information. When you return to work, your market
understanding, and scenario planning will be critical for your job and your firm.

Macro view:
For the biggest benefits to you and your career, simply observe yourself. During
the lockdown, you have lived a completely different life. You have engaged in online
meetings, long distance collaboration, made more calls than before, spent more time in
planning and less in execution. Your work habits have changed and so has your
manager’s. What may have been taboo to you earlier is no longer so. Identify how your
old way of being and thinking was restricting your growth and how you can implement
new learnings and thought processes into your life. Finally, contemplate on the meaning
of work for you.The frustration of the lockdown may have helped you realise that you
seek work not just for money. Perhaps your career is also the source of your identity, or
a symbol of your independence and maturity, or a reason to get out of the confines
of your home and engage with the world, or it fulfils an inner desire to contribute and
make a difference. Now decide who will you be and how will you change direction so
that your future career satisfies your other latent needs apart from providing an
income!

What is future of your company?

v-shaped recovery:
 What’s your company’s future? Will it recover? A McKinsey article on
safeguarding lives and livelihood discusses different recovery cycles based on
containment of virus and economic measures taken by a country. If a country limits the
growth of the disease within 2-3 months and averts fundamental damage to the
economy, a full recovery is possible in the short term. This means a V-shaped recovery
for your firm in say 6 months and your job, increment and promotion is mostly safe.
A clear example of a v-shaped recession is the Recession of 1953 in the
United States. In the early 1950s the economy in the United States was
booming, but because the Federal
Reserve expected inflation it raised interest rates, tipping the economy into recession.
In 1953 growth began to slow, in the third quarter, the economy shrank by 2.4
percent. In the fourth quarter the economy shrank by 6.2 percent, and in the first
quarter of 1954 it shrank by 2 percent before returning to growth. By the fourth
quarter of 1954, the economy was growing at an 8 percent pace, well above the trend.
Thus GDP growth for this recession forms a classic v-shape.

W-shaped delay:
If the disease spreads faster than desired while the economic measures taken are
not optimal, but still manages to protect some parts and ensures a functional banking
system, then the overall economic recovery will be slower. Your employer, industry
and the business environment will limp back to normal over a period of about 2-3
years in such a W-shaped recovery. If your firm can survive this period it will emerge
stronger. If you make yourself invaluable and retain your job, you will thrive too.
The early 1980s recession in the United States is cited as an example of a W-shaped
recession. The National Bureau of Economic Research considers two recessions to
have occurred in the early 1980s. The economy fell into recession from January 1980
to July 1980, shrinking at an
8 percent annual rate from April to June 1980. The economy then entered a quick
period of growth, and in the first three months of 1981 grew at an 8.4 percent annual
 rate. As the Federal Reserve under Paul Volcker raised interest rates to fight inflation,
the economy dipped back into recession (hence, the "double dip") from July 1981 to
November 1982. The economy then entered a period of mostly robust growth for the
rest of the decade.

U-shaped recession:
A U-shaped recession is longer than a V-shaped recession, and has a less-clearly
defined trough. GDP may shrink for several quarters, and only slowly return to trend
growth. Simon Johnson, former chief economist for the International Monetary Fund,
says a U-shaped recession is like
a bathtub: "You go in. You stay in. The sides are slippery. You know, maybe there's
some bumpy stuff in the bottom, but you don't come out of the bathtub for a long
time."
The 1973–75 recession in the United States can be considered a U-shaped
recession. In early 1973 the economy began to shrink and continued to decline or have
very low growth for nearly two years. After bumping along the bottom, the economy
climbed back to recovery in 1975.

L-shaped disaster:
If health and economic interventions fail then the virus may spread unabated for
12-18 months.Conservative consumer behaviour may drag a country towards a recession.
Supply chains may collapse as small businesses and companies default on payments or
go bankrupt. This will push banking systems towards a crisis resulting in an L-shaped
curve where the downturn extends with no immediate relief in sight. Your company may
shut down most parts. Don’t bet on retaining your job. Work on reducing costs and
figuring out other sources of income.
A classic example of an L-shaped recession occurred in Japan following
the bursting of the Japanese asset price bubble in 1990. From the end of World
War II throughout the 1980s, Japan's economy was growing robustly. In the
late 1980s a massive asset-price bubble developed in Japan. After the bubble
burst the economy suffered from deflation, and experienced years of sluggish
growth; never returning to the higher growth Japan experienced from 1950-
1990.

 SMEs should look for Change their banks in the upcoming months, owing to
changing expectations and demand of business.
 Any wide spread desire of SMEs to seek new banking providers will be good
news for recent entrants in business banking.
 SMEscan visit public sector banks (PSBs) to finance their capital work or
restructure their loans and like before PSB's should offer loans to increase the
"working capital limits for standard account upto 25 or more % of the working
capital limits.
 If 50% SMEs have two or more banking relationships then it suggests that
digital challenges may find it difficult to replicate their success in personal
banking of growing market share by becoming a customers secondary or
tertiary account .
 SMEs list being wedded to a local high-street branch, concerns over difficulty in
switching banks, and a belief the lack of alternatives as the primary reasons for
remaining with existing providers. These varying manifestations of customer
inertia have all also been frequently cited behind switching rates in retail banking
being historically being so low. Digital challengers may then need to look to the
same vehicles for stimulating change in the business banking market as they have
in drawing retail customers. One of these is in the onboarding process.

“Does your bank still require some processes to be undertaken in person?”

 Can you open an account, add a signatory, or apply for an overdraft without
visiting the bank manager in person?”
 Just as digital banks have removed many of the frictions of opening a new
personal account, removing the more cumbersome, administrative tasks in
business banking would surely prove a big draw for SME owners.
 Similarly, digital banks will need to look at what innovations they can deliver
thanks to Open Banking. If they can offer aggregation tools and dashboards to
allow clients to see their accounts with different providers, they could allay
some of the reservations that business owners may have about working with
multiple providers.