The world is confronting a pandemic that has already cost it over 19,000 lives and infected half a million people. It has tested and left wanting even the best healthcare systems. Left with little choice, many countries, including India, have resorted to an unprecedented nationwide lockdown. The virus is all set to send the global economy into a recession even as various countries throw fiscal prudence to the wind and announce far-reaching stimulus to combat the economic fallout of the epidemic which is still far from being contained.
Success seen in its containment — be it in China, South Korea or Singapore — gives hope that the world will eventually tame the virus even if it has to pay dearly in terms of the lives lost and economic setback. But what is becoming increasingly clear is that before Covid-19 is conquered, it may have changed irrevocably the way the world operates, at least in some aspects.
The need for social distancing is exposing people to new ways of carrying on with their lives. Many outside of the IT sector have resorted to work from home (WFH). Companies, which were hitherto concerned about data protection and cyber security, have been forced to find a way out to keep their operations going by getting their employees to operate from home.
Now both (employers and employees) are suddenly realising the virtues of WFH in terms of higher productivity, lower costs (savings in real estate) and better quality of life for employees (hours spent in commuting is now spent with family). Applications such as ‘Zoom’, ‘Skype’ or ‘Hangouts’ have ensured that digital meetings are as effective as face-to-face interactions. A few weeks of WFH may push many companies to embrace it as standard operating procedure. Commercial real estate players are already worried.
Similar worry haunt multiplex operators. Locked up at home, more and more people are experiencing OTT (over the top) platforms such as Netflix and Amazon Prime. Such has been the demand that OTT platforms have been forced to reduce the quality of their streaming to prevent bandwidth from choking. That these platforms are extremely infectious makes one wonder if footfalls into cinema halls will ever be the same again.
That apart, coronavirus could well improve India’s share of digital payments. Banks have cut back staff in their branches and encouraged people to opt for digital payments and online banking services. This is likely to push fence-sitters who somehow survived demonetisation without making the switch to adopt it this time. Also, e-commerce players such as Amazon, BigBasket and Grofers are seeing a huge jump in users as people scared of venturing out are ordering online. The fact that many brick-and-mortar retailers are setting up online shops in digital retail platforms such as m.paani is proof that this trend is real and likely to sustain.
In a world riven by virulent nationalism and tariff wars, coronavirus has turned out to be an unlikely tool that is restoring faith in multilateralism. Covid-19 has clearly shown that the nations have to work together if they have to overcome the pandemic.
Scientists across the world are working on a vaccine. Best practices have been shared for maximum outcome. In fact, doctors from Cuba and China have landed in Italy to help the country’s healthcare system that is at a breaking point. One positive outcome of the epidemic could well be a world that is less nationalist than what it was three months ago.
If the economic impact of the virus is long and government’s stimulus insufficient, many brands and business — big and small — will collapse. Take the case of the Indian aviation sector. It is said that the low-cost carriers will need an infusion of at least ₹3,500 crore if the crisis lasts three months and over ₹14,500 crore if it lasts 12 months. If they are not supported many players will die and the Indian aviation sector, already hit by multiple failures, will never be the same again.
It is the responsibility of the government to ensure that businesses, which have been asked not to lay off people or reduce wages, survive this economic shock. There are good lessons to learn from Denmark where the government has come out with packages that ensure that businesses survive and are available to function once the virus is defeated.
Many countries like India have put in place a hybrid healthcare model where government-run hospitals take care of the poor while others are handled by private players. Some governments are launching insurance schemes so that they could reduce their role in the healthcare space. Their healthcare spend as a share of GDP has been low. Corona has exposed the fallacy of this strategy.
Prime Minister Narendra Modi had to hurriedly announce an investment of ₹15,000 crore to enhance healthcare infrastructure to battle Covid-19. Such investments would have been unnecessary if the government had invested a larger share of GDP in healthcare. Also, such epidemics have shown that government needs to own and operate healthcare infrastructure, not leave it to the private sector, if it has to effectively combat them.
The US has always looked at OPEC as a cartel. That was when it was a consumer of oil. Today, it is the largest producer of crude and the equation, it appears, is changing, triggered by coronavirus. When crude prices collapsed after OPEC and Russia/Saudi Arabia failed to agree on an output cut, it began putting enormous pressure on American shale oil producers. Many are expected to file for bankruptcy as oil at $25 a barrel is unsustainable for them. Media reports are now emerging that efforts are on, brokered by the US, to get Russia and Saudi Arabia to the table.
There are also reports that Texas, the largest oil producing state in the US, has offered to cut output by 10 per cent if Russia and Saudi Arabia will agree too. Suddenly, the reality of US being in cahoot with the OPEC cartel has become a possibility. OPEC may not be far from reality.