Tata…, Air India!

The last time I flew Air India was before the pandemic to Shanghai from Delhi and return. The reason to fly Air India was obvious. There were no direct flights from Mumbai to Shanghai (Yes, surprise of surprise, after Jet Airways stopped flying this sector) and to save time on transit, it made better sense to fly to Delhi and take the direct flight to Shanghai. For most of us, the reason to opt for Air India for international flights, particularly when travelling for business/work would be this.  In the absence of a better option and not necessarily being the first choice.

The other set of non-business travelers from India (Students, Senior Citizens, vacationers) opt for Air India for cheaper fares or the extra baggage allowance which comes handy.  In the past one or two decades, rarely I have seen or heard anyone opting to fly Air India for its superior service or for the flying experience.  And herein lies the sad and sordid tale of Air India as a National carrier of India. If this is the situation with Indians, one can imagine where Air India would stack up in the minds of foreigners.

The situation was not so bad all along for Air India. During my MBA days, way back in 1990, we did a survey of air travelers in Mumbai as part of a marketing project. International travel was not common those days as it is now. I vividly remember that Air India fared very well in terms of perception and I guess those were the heady days for the Maharaja. But in the subsequent years as International air travel picked up and when the market was actually exploding in India post liberalisation, Air India was imploding.

The reasons for the rot in Air India have been chronicled well in Jitender Bhargava’s (Former Executive Director of Air India) book – The Descent of Air India. In a deadly cocktail of an indifferent and unaccountable Top management, political interference and string pulling and a demotivated and tired staff, there was only one direction the airline was heading – southwards. Of course, he argues that the descent was accelerated by ill-timed and ill-advised decisions including purchase of new fleet at uncompetitive prices and signing of non-profitable bilateral agreements during the UPA regime.  Irrespective of the political regime, it is a known fact that PSUs like Air India and ITDC were treated like personal fiefdoms by both the executive and the bureaucracy to further their own personal interests.

Now and then, different governments have tried to revive Air India by blowing money on marketing campaigns and taking advantage of exclusive route agreements.  The Air India marketing campaigns have always been top notch. But as I have said before, the best marketing campaigns cannot save a floundering product. Some of the attractive routes, Delhi-San Francisco for example, are profitable and well sought after by Indians but such far and few successes in between cannot sustain a full airline.

The present sad state of affairs at Air India, the losses it has accumulated, the capital it guzzles on a monthly basis, the struggles of the staff in getting salaries on time etc. have been documented well overall and hence not repeating those points here. Enough to say that if there was any company which the Government of India should disinvest and exit in a hurry, it was Air India. So after a few attempts in that direction right from the first time under the Vajpayee’s regime to Modi’s current run, finally the disinvestment of Air India is a reality.

 

Air India is Ghar Wapsi for the Tatas. The story of how Tata Airlines became Air India by a forced nationalisation is also well documented. It will be interesting to observe how the Tatas embrace Air India and more importantly turn it around quickly. For Ratan Tata, there is an emotional connect with Air India. But then, we know how just having emotional connect doesn’t help in business. It calls for a Himalayan effort to start from scratch, change the culture, compete and build a world class airline. Tatas of course is not new to the airline business. They have been running Vistara in a joint venture with Singapore Airlines for some time now. Tatas also have investments going in Air Asia – a regional airline. But then, taking over a fledgling Airline like Air India and turning it around is another cup of Tetley tea!

Airline business is one business which is CAPEX intensive and OPEX intensive at the same time. There are businesses which are highly CAPEX intensive but once done, do not incur high operational costs (Like the mobile telephony business). There are businesses that don’t require high CAPEX investments but need working capital and operational efficiencies to remain afloat and profitable (Like trading businesses). Airline business is one which demands very high CAPEX investments (Planes, slots, infrastructure etc…), high operational costs on a daily basis (fuel, high salaries, marketing etc.) and require operational efficiencies of the highest order in order to be profitable. The moving parts are so many that with one wrong move, the business can get into a crisis mode. Ask Vijay Mallya or Naresh Goyal. This is one of the reasons why we have seen so many airlines folding up in India itself ever since the skies were opened up to private players.

In Airline parlance, there are this headwinds and tailwinds. Tailwinds propel the flights and headwinds have the opposite effect. In he history of Air India as a business though, it has seen only headwinds.

I am certain that Tatas would have obviously done their homework that too extensively, before bidding for Air India. Now that they have won, they have their task cut out. There are many things going for them, on top being the good will of Indians in general towards Tatas. That’s why we didn’t see much of opposition to the announcement of Air India being sold to the Tatas. With “revenge travel” post Covid expected to take off, the timing is just right for Tatas to soar into the Indian skies with Air India N.0! I am personally looking forward to the day when I would opt for Tata-Air India as my first and only choice when I fly abroad. For now, it’s Tata, Air India from GOI and as Amul says, a “Good Buy for Tata”!

Post Script: Interestingly, the Air India Staff Union expressed its happiness over Tatas winning the Air India bid! When was the last time a staff union was happy over privatisation in India? And when was the last time we saw no noise from the Left over privatisation?  Acche Din are here, guys!

Catching up on the Economic Agenda!

Social Media is an ongoing battlefield for the IT Cells of political parties. There, you routinely find claims and counter claims by BJP and the Congress, which get forwarded and go viral.  Among the regular updates from the BJP side, the ones which are popular are those where Narendra Modi era (Post 2014) and Manmohan Singh era (2004-2014) are compared which show how the country has progressed rapidly in the last 7 years whether it is Highways construction, Rural Electrification, Toilet construction, Clean water supply etc. etc. However, one thing on which the BJP IT cell is put on the back foot by the Congress is the Economic growth. This is a graphic which is popular among the Congress supporters and rightly so where in comparison, the Singh era shows higher average GDP growth than the Modi era, so far.

I am certain that if there is one thing Modi as a person, who likes to leave behind a legacy in whatever he does, would like to correct, it would be this. Frankly, I had high hopes from this government in its first term on its economic agenda. I thought that with a clear majority, it will pursue bold and long pending reforms with a much higher vigour than the reformist Vajpayee Government which was always bogged down by coalition pressures.  It turned out that, but for the introduction of GST (a landmark and very important reform, in my opinion) and Demonetisation (in which the costs outweighed the benefits), the 1st term was lack lustre and was more or less on “Maintenance mode” as far as pursuing a bold economic agenda was concerned.

It is my opinion that lawyers do not make good Finance ministers. P.Chidambaram, a fine lawyer, who is regarded as one of the most reformist Finance ministers the country had, always use to come up with one nit picking thing in his every budget, which cast a dark shadow on all the other good reforms he came up with. We all know what happened with Pranab Mukherjee, another Finance minister with a legal background. His retrospective taxation idea much against the wishes of even the economist Prime Minister Singh, punctured the “India Story” then and our economy went into a tailspin. So, that’s what happened with the Modi Sarkar in its first term. Arun Jaitley, another fine legal eagle was picked as the finance minister but, even during his regime the retrospective taxation was not rolled back! With no much economic traction, the 1st term of Modi ended on a disappointing low economic growth path.

In 2019, when Nirmala Sitharaman was made the Finance minister in a very surprise move (not Piyush Goyal who was touted as the favourite), expectations were quite low. But, I had mentioned that time, that she could surprise the critics at the end of the day. I felt that considering her background and her studious nature, she can be expected to meticulously follow the agenda as laid out in the manifesto. Not just that, but also follow through methodically in terms of execution.  You can see that this is what is happening now.  In her 1st budget in 2019, when corporate taxes were cut – a bold economic move to boost private investments and sentiment, it appeared that the Modi Government in its second term had got its intentions right in pursuing its economic agenda to boost growth which faltered in the 1st term.

 

The pandemic though, which hit all economies hard including India in Feb/Mar 2020 put a spoke all further bold moves. Economic management during a pandemic is a double edged sword. The government needs to focus on lives on one hand and livelihood on the other and that too when its income is crippled.  But, I thought that the team managing the economy in this government weathered the Covid storm very well and managed to tide over the crisis very well, under the circumstances.

In the midst of the pandemic last year and perhaps even now, top economists of the likes of Dr. Abhijit Banerjee, Dr. Raghuram Rajan and Dr. Kaushik Basu have been of the opinion that the Central government should not worry about fiscal deficit, agency ratings and all. Among other things like increased spending on health, they maintained that it should just do cash transfers through DBT mode to the needy. However, the government took a more cautious and calibrated approach of support by providing free ration to the needy, extending loan support to businesses etc. instead of cash transfers.  This has been a clash of ideas between the economists in the government and economists commentating from outside.  Frankly, I felt that what our government did is a better approach for a country like India.

Unlike the West, in India, people are more conservative financially. So, when a person gets free cash during a pandemic his first instincts will be to save it for spending on essential goods rather than on non-essential stuff to boost demand. Secondly, thanks to the lock down, there were supply restrictions. It is not logical that people will spend money just because they have been provided with cash support. So, the Government’s calibrated approach of providing free rations to the needy serves the purpose of protecting livelihoods during the pandemic. The salaried upper middle class and above were anyway not so affected as they were getting the salaries and even they spent only on essential stuff basically due to lockdown restrictions. So, the argument that Direct cash transfer would have boosted demand in the times of a pandemic doesn’t seem logical at all.  If not all, a few economists like Swaminathan Aiyar finally admitted that this approach worked better for India.

It is in this context of understanding the thought process of this government on handling economic issues during the pandemic that I bumped on this video. In this speech, Sanjeev Sanyal, Economist and Principal Adviser in the Ministry of Finance, articulates brilliantly the approach of the government in managing the pandemic from an economic stand point. If you haven’t watched it, please do so.  It answers quite a few questions which are routinely thrown at this government at the way it has been responding to the pandemic.  Its clear from the speech that there is a “method” in the thinking of the government while there is “madness” in the newsrooms that feed us information.  I wish that the government articulates the thinking behind their decisions more regularly for the benefit of all.

Now if you see the last few months, it is clear that the government is dead serious in reviving the economic growth. Some of the decisions since March have been bold and commendable. The rolling back finally of the retrospective taxation is one.  The Asset Monetisation program is another.  Taking a call to relieve the stress on the balance sheets of the banks by forming a “Bad Bank” is also another one.  Again, addressing sector specific long pending issues like in Telecom is yet another.  So, there has been a slew of bold decisions recently that gives a hope that in this term, with the pandemic hopefully behind us, the Modi Sarkar is pushing aggressively on its economic agenda.

As an economy, I believe we are at an interesting and crucial point. The pandemic is ebbing (or so we believe). Vaccination is progressing at a rapid pace. Economic activity is getting back to normal. These should bring the economy soon to pre-Covid levels. Now, if the bold reforms that have been unleashed this year has the desired effect, the growth only can be higher from here. For the Modi Sarkar which is finally catching up on the economic agenda, it will be a lasting legacy to demonstrate a higher average economic growth than the Singh era. And for the IT cell of the ruling party, few memes less to counter!

Debate around the Growth of the Indian Economy!

Few weeks ago, the GDP numbers for the 1st quarter of this fiscal year for India were published. As per that, the Indian economy grew by 20.1%. In the following days, there were columns, Op-Eds and Social media commentary on whether it was a good quarter or not. Since “Neutral media” is an Oxymoron, depending upon the leanings of the media, the economic performance was either branded “historic” or “pathetic”. There are no surprises here and we have now learnt to live with the media spin on all issues.

Along with the media, the tribe of “Neutral Economists” is also on the wane.  Depending upon their political affiliation, the first quarter performance was touted to be “record breaking/highest ever” or “worst/shocking” in decades by reputed economists.  Therefore for an Aam Admi, it is difficult to judge what actually the situation is. And the truth as in many situations may be somewhere in between.

I am no economist but as an ardent follower of the Indian economy, I tried to make sense of the numbers and the trends thereof and this is what I find. I would like to hear the opinion of the readers as well on my hypothesis.

In isolation, a GDP growth of 20.1% is of course very good. But, we should not forget that this is at the back of a low base of -24.4% same Quarter last year. In that sense, some of the commentary from pro Government circles that this growth is massive and is earth shattering etc. is immature.  At the same time, commentary from the opposition side comparing this with GDP rate pre-Covid and claiming that actually it is lower than what it was two years ago is equally immature. And this is why.

First, the reality is, on a trend line after a massive negative growth of 24.4% in Q1 last year and growing marginally by 1.6% in Q4, a growth of 20.1 in Q1 this year shows that the economy is indeed recovering and the recovery is V-shaped to be precise. This is certainly to be happy about.

Second, we must keep in mind that during Q1 this year, we got caught by a massive second wave which again put several curbs on the functioning of the economy, which was as such firing at much lower levels than before. So, among the eight buckets which contribute to the GDP namely Manufacturing, Construction, Agriculture/forestry & fishing, Mining & Quarrying, Electricity/Gas/ Water & other utilities, Trade/Hotels/Travel & Communication, Finance & Real Estate and Public administration, Defence & other services, it is obvious that a couple of engines are not firing at all. It is therefore natural that when you compare with the pre-Covid situation, the GDP in absolute numbers will be lower. This however does not take away the fact that with the easing of restrictions, the economy is obviously recovering.

Third, let us take a look at the monthly GST collection numbers for the past couple of years.  The average monthly GST collection figure in 2018-19 was Rs. 98,114 Cr. and the average in the 1st four months of 2021-22 is Rs.113,333 Cr. 2018-19 was pre-Covid, normal times and these four months are right in the midst of Covid. And compared to Rs. 101,818 Cr. monthly average last year. So just a cursory glance shows that the economy is on the mend clearly this year.

Here, I would like to dwell into a larger point and thereafter a question.

I would presume that GST collections represent transactional activity in the economy with respect to both goods and services. We are all aware that post the pandemic all “Contact” based sectors have been severely affected. This includes the likes of Travel, hospitality, Wining and Dining (all these for business and pleasure), impulse shopping, recreation and entertainment of all sorts and other human touch related services (salons, spas…). While the Software industry per se has not got affected due to Covid with “Work from Home” filling in well, the ecosystem around it has been significantly disrupted. This includes transportation, catering, real estate, utilities, other discretionary spending and stuff.

As common public, our shopping is mostly restricted to what is required. We travel only when it is utmost required.  The “Festival economy” which is big in India has been crippled since last April.  So my question is, when transactions around goods and services have been curtailed, how is it that the monthly GST collections have shown a growth over 2018-19? (Pre-pandemic period)

There are can be two inferences from this trend:

First, if the monthly GST collection is showing such a robust 15% growth (over 2018-19) even during the pandemic times, once we are done with the pandemic and when all the cylinders start firing, we are looking at an exponential growth in monthly GST collection figures. (Even adjusting for inflation)

Second take away is, either with whatever limited avenues left to us, we are consuming much more than average or there is a significant shift towards formalisation of the economy. I would like to believe in the latter. I don’t think we are consuming more than what is required. However, certainly our purchasing patterns have changed. Due to the pandemic imposed curbs, it is possible that our dependence on the neighbourhood mom and pop stores have come down and we have got used to the convenience of door delivery for everything.

As a personal example, pre-Covid, we used to buy vegetables and fruits from our neighbourhood bhaiya. Once lock down struck, this shifted to a vegetable vendor who was arranged by our apartment complex for door delivery. Here, payment was through G-pay/PayTm etc. Now in the past few weeks, the same vendor is now part of an E-Commerce aggregator called Bhajiwala.com! Bhajiwala.com, I am sure is within the ambit of GST and hence clearly part of the formal economy! My view therefore is, the benefits of GST implementation which we were all looking forward to is beginning to accrue and will be more visible when we are out of the pandemic.

It was widely believed that once GST is implemented, it will add 1-2% to the annual GDP. I now believe that once the pandemic is over and when economy starts firing in all cylinders like before, the bump due to GST could be in excess of 2% because of the increased formalisation of the economy is the last 2/3 years. This I am talking about even after the pent up demand effect.  That should put the naysayers of the GST to rest.

Though we cannot take the stock markets as a real indicator of the state of the economy thanks to its fickle and speculative nature, probably the markets are seeing into the future as above which others are not.  Which is why the markets have been on fire since the last few months even in the midst of the pandemic.

In conclusion, I would like to say that yes, the high growth in Q1 is due to the low base effect.  Yet, it is a significant milestone and pointer towards a robust economic recovery. It is certainly one to be cheered upon if not celebrated upon as yet.  Acche Din are around the corner!

Pic Courtesy: The Economic Times

Olympics and Sports as a great Unifier!

The Tokyo Olympics 2020 which got delayed by a year due to Covid, finally got over today. The Indian effort at the Olympics culminated in a flourish with Neeraj Chopra winning the Gold in Javelin throw. All these years, after every Olympics, the commentary has been about how a country of 1.3 billon cannot win even one Gold.  Or for that matter how small countries like Kenya and Spain can win more medals than India. This time, we will be spared of the usual diatribe or so I hope. For, we won a Gold that too in a track and field event for the 1st time. With a total tally of seven medals that included two Silvers and four bronzes, this is our best outing in an Olympics. Not just that, we missed a handful of bronzes by a whisker.

At a time when the whole country has been going through a challenging phase for more than one year tackling Covid and its spiralling after effects, the encouraging performance of our contingent at the Tokyo games came as a whiff of fresh air. We almost forgot to track the everyday Covid statistics of daily new infections, number of deaths and the R-Factor etc.  The media as well, which is what steers our attention usually on a day to day basis, gave more coverage to the games rather than the usual stories.  For a change, WhatsApp groups were buzzing with forwards related to the lives of the winners at the Olympics. And for once a Javelin throw was being watched by many Indians when a Test match was going on in parallel!

I have not seen this kind of frenzy for following Olympics as we saw this time, ever before. This kind of excitement and passion is usually reserved for Cricket in India. With Cricket of course, the craze and following have been for a long while.  For instance, an Indo-Pak Cricket encounter at any level can bring India to a grinding halt. Cutting across geographies, religion, caste, creed, language, gender and social strata, a World Cup Cricket match and that too if between India and Pakistan unifies India like no other.

What we have seen in the last few days with Olympics has shown that the Indian passion for Cricket need not be exclusive. People’s passion will follow wherever we win or succeed. For long, it has been ingrained in our minds that “Jo Jeeta Wohi Sikandar”. But the other part is the question of National Pride. The number of times the clip of Neeraj Chopra on the podium with the National Anthem being played in the background, got shared on Social Media since yesterday is a testimony to this.

The general commentary or narrative has been that we Indians only support or cheer Cricket and that is the cause for other sports not flourishing. While this could be true, it is only partly true if at all. I am of the opinion that as Aam Admi, what we chase is not Cricket, but National Pride. For a long time that National Pride has been bestowed upon us by our repeated success in Cricket. So, we became a Cricket crazy country.

Make no mistake. If our Indian Hockey takes off from what we have achieved at the Tokyo Olympics, fan following, attention and of course money will chase Indian Hockey too. Same is the case with other sports as well.  Well, defending India’s craze for Cricket versus other sports is not the purpose of this blog. But trying to articulate that any sport or for that matter any event that arouses National Pride can be a great Unifier in a diverse country like India, is.

That is why I find questions often raised on why India should spend its money and resources on the Chandrayaan and Mangalyaan missions while millions languish in poverty, to be ill founded. We have seen how landing its men on the moon first successfully with the Apollo mission tilted the scales of National pride in the US during the Cold war period.

Similarly, I saw some questions being raised as to why Orissa state should spend its money on sponsoring the Indian Hockey Team instead of focussing on its own state’s players. If by spending that money, Orissa has enabled the revival of India’s fortunes on the world stage as how we saw in the Olympics, it is certainly worth it.  The National Pride that got aroused thanks to the performances of the men’s and women’s Hockey at the Olympics is priceless. For everything else there could be a MasterCard. And Naveen Patnaik the shrewd politician he is, has understood this well and took a call to back the Indian Hockey teams when no one else did.

As I had written in my 2016 piece post Rio Olympics (Read here), availability of financial resources is a key factor in winning more medals.  So, with the backing of sponsors, talented sportsmen can get access to the best – whether it is coaching staff or equipment or infrastructure. We have seen this in the flourishing of a Neeraj or a Sindhu or a Saina! What Orissa has done or a few other brands have done is an eye opener for many including other States, Centre and Corporations to pick up a sport or sportsmen and back them to the hilt. The returns on this investment by way of National Pride and the associated brand recall is beyond comprehension in a spreadsheet.

And no one else understands the power of National Pride than Narendra Modi. Each and every phone call he makes to a winner is because of this understanding, the after effect of it, we will see in 2024.

Postscript: The next Olympics is in 2024 😃😃

Wanted – Reforms on “Kaizen” Mode!

In the last few days, newspapers and online portals have been filled with nostalgic Op-Ed pieces on how the 1991 reforms happened as we celebrate 30 years of the reforms. These pieces by some of them who were part of “reforms team” then and other commentators often talk about the circumstances in which the reforms were unleashed, how the then Prime Minister Narasimha Rao weathered the political storm in taking some bold steps and how the then Finance minister Manmohan Singh and his team went about implementing them finally.

Yes, the “1991 reforms” was a significant event in our post Independent political history and in terms of impact on the ground, probably the most significant. Though it was not realised then, the reforms package helped to change gears of the country which was stuttering at a modest pace of growth all along, while the rest of the world was galloping.  It also helped lift millions of Indians out of poverty in the next 20 years.  So, it is apt that we give due recognition to the process and the people behind it and celebrate with much enthusiasm.

As a country, we are in a phase where we need the next reforms momentum. One that will define our growth trajectory for the next 30 years. In that sense, we need to now move on from living in past glory of what the 1991 reforms delivered and initiate the next cycle of reforms. So, what could they be? A reform is defined as a change brought in an existing system to make it better. Therefore there are reforms that result in incremental changes, thereby incremental benefits and there are reforms that are big which result in monumental changes and thereby impact. 1991 reforms can be grouped in the latter category.

 In the last 20 years, since the Vajpayee regime till now, it’s not that there have not been reforms of the big impact category in our country. But they have been few and far between. In the issue of reforms, I would like to see the glass as half empty. What we need is the next bust of reforms one shot that will change the course of our country forever and for the better. And if at all there is an opportune ‘muhurat’ for the same, it is this. Because when we come out of Covid hopefully very soon, we need to not just recoup the lost two years but get back to an irreversible high growth trajectory.  And for that, we need a whole set of big bang reforms that need to be unleashed ASAP. And I will group them in the following critical areas:

  1. Ease Of Doing Business: While we continue to say that we have improved our ranking on the Ease Of Doing Business front from before, those of us on the ground very well know that India continues to be a complex country to do business in and with. And the issue of “Central” subjects and “State” subjects adds complexity to the whole thing.  To put this in perspective, we have 1536 Acts, 69233 Compliances and 6618 filings to comply with for our businesses in our present regulatory environment.  There have been bits and pieces effort in states to remove/amend rules and regulations in the last few years. But these are just incremental changes and do not move the dial. What we need is a complete review of the existing rules and regulations across all states that include Central laws and state laws and a wholesale repeal of all the frivolous ones.
  1. Labour: This is connected to the “Ease Of Doing Business” but has scope beyond that as well in terms of ensuring competitiveness and achieving productivity as well. A paper I read on Labour Reforms mentioned that labour laws in India constitute 30% in terms of acts and 47% in terms of compliances in our regulatory framework! In terms of numbers, it is 463 labour Acts, 32542 labour Compliances and 3048 labour filings! Not that the existing regulatory environment has benefited the labour so far. The current labour laws cover only 9% of India’s employee base! So, there is an express need for simplified labour laws that will help the industry to grow while remaining competitive, will be fair to the employees while empowering them while bringing a majority of the labour force in its ambit.
  1. Infrastructure: It is undisputable that the general infrastructure in India has grown leaps and bounds in the last 20 years. There are two ways of looking at this. If we compare with where we were in the past, then of course, things are certainly better. If we look outwards and compare with our peers, then we will realise that we have still a long way to go in basic infrastructure. It is also a fact that with respect to infrastructure we are always in a perennial “catch up” and “Work in Progress” mode. And I will explain this with an example. In 2005, in the Nagoya city of Japan, a new airport was thrown open just to coincide with the World Expo that happened in that city. When I visited Nagoya in that year, I was appalled to find the new airport almost empty though, it was witnessing almost 4-5 times the normal traffic on account of the Expo. Compared to the old airport, the new one was huge and I was told then that this airport was now built forecasting for next 30 years of traffic growth so that they don’t have to meddle with this for a long time. Now, this is the approach required for infrastructure projects. However in India, we build projects based on today’s situation and by the time the project is completed, it is already bursting at its seams. The new Bengaluru Airport is an example of this. Inaugurated in 2008, it had to launch its expansion by 2011 within just three years! Most of our highway projects are planned like this. That’s why I say that the grudge towards the bullet train project in India based on today’s situation is ill informed. By now, we should have kicked off at least eight bullet train projects, not one.  Unlike in the past, financing for infrastructure projects is no longer a concern. There are global multi-lateral agencies backed by developed countries willing and waiting to fund viable infrastructure projects in a country like in India which offers potential and returns.  In the area of Infrastructure, we need drastic reforms in our planning method and execution. And that brings me to the next critical area.
  1. Land: Most of our infrastructure projects get stuck or go through inordinate delays due to the issue of land availability aka land acquisition. This is an indeed complex issue but we need to study best practices in other developing nations and come up with a new method that is fair to all and makes the process easy and less time consuming. The present Land Acquisition bill in its form needs urgent reform.

There are other areas too where reforms are the need of the hour and I will continue with those in Part – 2 of my blog next week.  But my focus remain on areas related to economic growth. To part conclude this piece, I would like to say that “Reforms” are a continuous process. And so continuous improvement of what we do is required. Going back to the Japanese way, they call it the “Kaizen” approach in management.  In India, we need Reforms on “Kaizen mode”!

To be continued.

 

30 Years of “1991”!

As I was wondering what to write on this week, I realised that in a few days, half of this year 2021 will be over.  Back in January, everyone thought or rather hoped that we were all done with the “New normal” and soon one will get back to the “Old Normal” in more ways than one. Till March, we were coasting on towards that. Then came the dreaded 2nd wave leaving us literally gasping for breath. And in no time we are back to hoping to see the end of this year.  Just the feeling we had the same time, last year.

And probably 30 years ago in the year 1991.  If 2021 has been a tough year for those who are running the country, I reckon 1991 would also have been so and for a variety of reasons.  When the history of post independent India is written, the year 1991 would feature prominently. Today, the year is associated with the unleashing of economic reforms and liberalisation in India and being crowned as the ‘Year that changed India”. But it has got so many other associations to it, which is what I thought I will write about, when we are in the midst of “30 Years of 1991”!

As 1991 dawned, I was in my 2nd year of MBA course in Bombay. Just as the year commenced, we were witness to the 1st televised war in the Gulf when US attacked Iraq to liberate Kuwait in “Operation Desert Storm”. In India, cable TV was still in its infancy. But we could watch some visuals of the war in “The World This Week” programme which made New Delhi Television (NDTV now) and Dr. Prannoy Roy household names in English speaking households in India.  I must add here that those days as young students we had tremendous appetite for news and current affairs which is seemingly missing in the current generation. Oh yes, that law of diminishing marginal utility! When News is a plenty all around, it finds lesser and lesser interest.

And it was during this war in 1991, that India probably removed its veil of Non Alignment, when the then government under Prime Minister Chandra Shekhar allowed re-fuelling of US Aircrafts in India. The decision had to be soon reversed under immense political pressure eventually in particular from the Rajiv Gandhi led Congress which was supporting the Chandra Shekhar government from outside. Though the war happened in the Gulf, it had its own implications for India as a country. Oil prices sky rocketed pushing the imports bill to hit the roof and plunging the economy into a deeper crisis. And we had a humanitarian crisis to deal with as the Gulf was home to millions of Indians.

In May, I was back in Madras after completion of the course and preparing to return to Bombay after a short break. On the 21st May, 1991, Rajiv Gandhi was assassinated in Sriperumpudur near Madras by a suicide bomber at an election rally. The death of Rajiv Gandhi that too in that most tragic manner shook the nation. Rajiv Gandhi was all set to return as the Prime Minister with the Congress getting a comfortable lead. But his untimely death put the country again in chaos and when the results came, Congress became the single largest party but short of majority on its own.

It is difficult to speculate as to what would have happened to our country had Rajiv not been killed and had he returned as the Prime Minister. It was widely believed that having learnt his lessons from his first stint, Rajiv was a wiser man and with his youth, energy and impatience would have changed the course of the country for the better.

With the loss of Rajiv, P.V.Narasimha Rao became the Prime Minister heading a Congress led coalition government. He made Dr. Manmohan Singh his finance minister and between them unleashed a slew of economic reforms that liberalised India. Those were eventful days and day after day, headline grabbing announcements followed.  Dramatic devaluation of the rupee, pledging of the country’s Gold reserves, announcement of the New Trade policy, announcement of the New Industrial policy that would end the licence-permit Raj,  the historic Budget presentation and so on. When all these were happening, one didn’t realise that these will forever change the destiny of India.

Unlike now, when economists and policy experts are in unison singing the praise of the 1991 reforms, back then the reforms were always projected as “Acts in Duress”.  Even among the ruling Congress, there was no consensus on the reforms forcing Dr. Singh to make that famous quote that he walked around with his resignation letter in his pocket.

Elsewhere in the same year, the dissolution of the Great Soviet Union was in rapid progress and by December the entire Soviet Union was formally dissolved that eventually ended the Cold War.  Google also tells me that the World Wide Web was launched to the public in 1991 and Microsoft.com went online, though I have no recollection of these!

Coming back to India, not to be limited to financial problems, in the same year 1991, on June 28th, Kashmiri militants kidnapped the then Executive Director of IOC, Mr. Doraiswamy. He was finally released after a couple of months in exchange of a few militants. I remember this vividly as day after day front page in the newspapers were occupied with this news.

For India, not just 1991 but the next two years were indeed full of challenges that wrecked the country pushing it from one crisis to another.  So, looking back, as a country we came out of all that relatively unscathed as we kept growing to what we are today, though the pace and extent of growth may not be our liking.

30 years hence, in 2021, as a country we have been inflicted hard by a global pandemic that has been hogging everyone’s attention. Our economy has been bruised badly. Lives have been lost and still counting.  Clearly not just India, but globally we have been set back by couple of years if not more.

As we come out of the 2nd wave, a recovery is imminent but not without the potential danger of further waves. We can only hope that this time also we will follow the 1991 cycle.  If you remember, the economy fared poorly in the 1st year of the reform (1991-92) but from 1993-94 after two years, the economy was on a roll.

Going back to 1991, personally for me that was the year when I started my professional career and so along with the country, the year has a personal significance and it will be always etched in my memory.  Where were you in 1991 and what are your memories of that year? Do share in the comments section.

India’s Vaccination Conundrum!

Delhi, India’s capital reported around 1600 new cases yesterday with the test positivity rate dropping to 2.5% from a high of 35% in April. Mumbai, the commercial capital reported around 1300 new cases yesterday. In the 1st half of April, the daily cases were averaging 10000 plus.  Both these cities are under near complete lockdowns and the reduction of activities has helped to bring the case load down. Elsewhere in India, many cities and towns are still showing a worrying trend and the respective authorities have imposed circuit breakers and I am certain the numbers there will also show a decreasing trend in the coming weeks.

Now with the decrease in the case load in Mumbai, already there is a clamour to “Unlock” so that business activities can resume. In Delhi, the Chief Minister has said that if the cases continue to drop for another week, his government will start the process of unlocking. As we saw in the past, when the lockdowns are eased, there is a chance that the case load goes up. It is a vicious cycle of numbers going up and down with locking and unlocking. Hence, at this point of time, the only option we have, to break this cycle is to rapidly vaccinate majority of the population.

India’s vaccination program thus far has only flattered to deceive. The programme kicked off on the 16th Jan, 2021. It is now over 5 months and yes, we have administered over 18 crore doses but, the coverage has only been 3% of the population. If we continue at the same pace, we will take years to cover the total population by which time, wreckage on all fronts due to Covid will be humongous. It is clear as daylight that we have to up our ante on the vaccination front as of yesterday.

This is where the government’s overall planning on the vaccination program begs all kinds of questions.   During the initial phases of the program that was meant to cover health workers and later senior citizens, one thought that the program was proceeding smoothly. However, it was during the 2nd phase – that of citizens over the age of 45 commenced, the whole program started falling apart. From a phase of vaccine hesitancy we quickly moved to vaccine shortages. And this was happening exactly at the time when the second wave Covid numbers were hitting the roof on a daily basis.

A panic struck government facing fire from all directions on a single day opened up the vaccination program whereby it allowed vaccine makers to sell 50% of their stock to states and private sector. And in another bizarre move, it opened up the vaccination to 18+ age group with a caveat that this will not be sponsored by the Central government.  Bizarre, because the opening up happened when there were no sufficient stocks to cover the 45+ age groups adequately.

Today as far as vaccination is concerned, there is a strange situation. As I mentioned earlier, there is less vaccine hesitancy among people. There is a good awareness and urge amongst many to get the vaccination done. However, due to the shortages, we are back to the good old “IRCTC” days. The tyranny of OTPs, slowly loading site and the fastest finger first routine are back. Those who are not IT savvy, have to make the daily trips to the centre and try for walk in jabs and of course deal with big lines there, that too during Covid times. The Cowin portal which at the outset is impressive is a gate keeper today. And for some strange reason it is available only in English language!

As I have written in my earlier posts, as far as Covid is concerned, there have been many unknowns. The magnitude of the second wave came as a big surprise and caught all of us in the back foot. I have argued that no government in the world could have planned and smoothly handled a wave which is 3X and 4X times the peak of the previous wave in terms of hospitalisation requirements. On this, the barrage of excessive criticism on the Indian Government has been a bit unfair and we should cut the government some slack on this.

Having said that, where the Government and here I mean the Central Government, has been found wanting is on the vaccination project front. In this project, there were lesser or no unknowns. Data of the population, the production capacities of the indigenous vaccine makers were all available right in front. Yet, we did not move on securing enough stocks of the doses for vaccination. It is not clear if it is executive decision making or bureaucratic sloth that has landed us in this situation. Either way, we missed the bus.

While the important aspect of arresting the second wave is in progress, the Central Government must shift its priority to bringing the vaccination program back on track. We are now seeing that the program of state governments procuring vaccines directly is not taking off. In response to the global bids floated by the Municipal Corporation in Mumbai (BMC), only suppliers of Sputnik have quoted. And there again, with the stringent supply conditions of the tender, I doubt any supply will happen in the near future!

Therefore, the onus is on the Central Government to ensure sourcing of the required doses of vaccines required to vaccinate at least 70% of the population by end of this year. That would mean making available over 160 crore doses from now till December. In a recent press conference, the government put out a table that said that the Production/Availability of vaccines from August to Dec is 216 crore doses. With this availability picture, has the central government placed the orders on the vaccine makers already at least for the approved ones? Are the approval process for the other vaccines on queue put on fast track? Has the government assessed the working capital requirements of the indigenous vaccine makers and committed the same? Is the supply chain secured for the production of the vaccines as per capacity? IS work happening on the Cowin site to make it more citizen friendly?

If the answers are yes, we have learnt from the past mistakes. If No, we have decided to live “Ram Bharose”.

Image Courtesy: Amul

Covid – Contending with the Waves of Uncertainty!

If at all there has been one thing which is consistent with Covid, it is its remarkable inconsistency.  From the time Covid entered our collective lexicon in February last year, every theory or conclusion related to its behaviour has been found to be inconsistent or invalid very soon after.  Like India was never affected by Bird flu or SARS virus, so we will not be affected by Corona virus (See the situation today). India is a hot country and in peak summers, Virus cannot survive (It did hit us through the last summer). India will be spared as we have better immunity for many diseases (Of course India was not spared).  During monsoons in places like Mumbai, Covid is going to create a havoc (There was no specific spike during monsoons).  Masks are required only if you have symptoms but hand washing and sanitising are most important to prevent the spread (Today, it seems it is the other way – Masks are most important and hand washing is not that important).  Once vaccines are found, that will be the end game for Covid (Vaccines were indeed found but the end game is still not in sight).  Once you take the two doses, you are safe (Now the latest theory is, we may have to take vaccines every year!). This was just to list a few theories on Covid which have got negated along the way.

We must keep this in perspective when we make our judgement on the way the municipal administration or State governments or the Central government or the Prime Minister have handled what is now called as the 2nd wave in India. Let us all be honest. Since the dawn of this New Year, all of us have in some way or other started moving towards leading a normal, pre-Covid life. We started – travelling out of our cities, taking vacation breaks, working from Office, wining and dining out, going to places of worship, having social get togethers, planning for house functions and getting domestic helps back in our houses, to mention a few normal/pre-Covid activities.

All of us were keen to put Covid behind us and lead a normal life. We all understand that it is important for economy to get back to normal which can only happen if consumption in all spheres get back to normal. We were all happy when GST figures reached pre-Covid levels and were delighted when it started exceeding pre-Covid numbers. All this when we also got the news that vaccines were available and we could see some light at the end of the Covid tunnel. We all celebrated and rejoiced about how India came out unscathed on Covid.

What we did at individual levels, companies did at their level as well with respect to businesses. And similarly the administration and Government did at their levels. In this period, we must not forget that farmer protests which in normal Covid times could be super spreader events were going on in most parts of North India. Yet, we didn’t see any spike in Punjab or Delhi or other states where farmers in large numbers were protesting taking limited or no Covid precautions. A full test match was held in Chennai with spectators watching it and there was no spike after that. Looking at these I guess, the Election Commission went ahead with the conduct of the polls in the five states in March and April. Ditto for the Uttarakhand government for the Khumb festival.  We all lowered our guard. Not just the government.

Today, however in India, we have been savaged by a Covid Tsunami. So, what we see all around are depressing news about deaths, sufferings and other collateral issues, all related to Covid. We have been hit by a lethal second wave which none of us saw it coming. This is where the first failure of the epidemiologists, experts and relevant authorities in the administration come into picture. All the while in the 1st Quarter of this year, I only saw experts explaining how India has flattened the curve and how we were moving towards herd immunity.  So, when other countries like the UK, USA and a few European countries were hit by a second wave, why was there no alert from the experts of a potential second wave in India?

In the mid of March, we could see suddenly numbers rising in states like Maharashtra and Kerala without any specific trigger like a super spreader event. When at that time, a few were enquiring with me on what’s happening in Mumbai, I mentioned that it is only a question of time the numbers start going up in other cities/states. And that’s what happened. So, when a person like me without looking at any regression models or analysis could predict that we are up to an imminent spike in numbers, how come the state governments and Central government did not realise that we are walking into a sudden burst if precautions are not put in place immediately.

Even in the 3rd week of March, if the Election Commission had announced strict regulations on campaigning or Khumb was made symbolic as it was done eventually, things would have been different. Or if all states including Maharashtra started what it is doing today in terms of restricting movements, we could have avoided the crisis. This is the second issue.

As some wise man said, “Before, you are wise. After, you are wise. In between, you are otherwise!” In hindsight everyone is God. Anyway, today lock downs have been put in place and I am sure, the numbers will start coming down in the next 4 weeks. Already the numbers in Mumbai are showing a declining trend day by day. But, once we reach a trough, again it will be time for “Unlock 2.0”. When that happens, we may once again at some point of time witness a third wave, unless by that time we have vaccinated a reasonable mass of people.

It is clear therefore that the key to prevent further waves, is vaccination. Or so we hope at this point in time, unless even this theory gets demolished. It is now apparent that the vaccination roll out has been patchy.  Just six weeks into opening up of the vaccination program to public, we have a shortage of both the vaccines.  And I am not joining the chorus of why India exported vaccines when we should have used it for Indians first. The external affairs minister has articulated recently that if we do not support other countries, we cannot expect support from other countries for supply of raw materials. This could be the official line. But the main reason why the government also decided on exports initially was the shelf life, in my opinion. The government cannot give this reason out for obvious reasons.

The shelf life of Covishield is six months from the date of production. As per Serum institute, by the end of December, it had already produced about 50 million doses of the vaccine. I must add here that it had started producing and piling up inventory even before the official approvals. Since the vaccination roll out in India was planned to be in phases starting first with the health and frontline workers for obvious reasons, the stock would not have been consumed before the expiry. Hence, exports meant to serve triple purposes as per me. Consumption before expiry, generation of good will with Vax diplomacy and fulfilment of commercial and licence related contracts for Serum.

A committee under Niti Aayog has been entrusted with the roll out of the vaccination program and it appears that the whole plan was based on “let’s cross the bridge when we get there”. How else can we explain the fact that the Central government had not secured supplies for the vaccine from the two approved sources at least to cover 60% of the adult population right at the beginning? Why is it that the companies were not committed working capital support right at the contract signing stage? If there was a clear plan of sharing of responsibility between Centre and states, it was never made transparent. And today we see that the whole vaccination has been opened up but without ensuring supply. From vaccine hesitancy, it is now a rush for vaccine. It is going to take at least till June for stabilisation of supplies. To me, more than not anticipating the second wave or being lax on taking actions after witnessing the second wave, the ill preparedness of the government on the vaccination roll out is the main issue.

While it is now clear that we as a country have landed our foot into a second wave land mine, the last thing we should see is politicking over this and the never ending blame game between the Centre and states. It is high time that the Centre and states work together in diffusing the crisis rather than pointing fingers on who is wrong at this stage. This is a collective failure of all of us, the society, the administration, the domain experts, the State and the Central government.  As common public we must now learn to be cautious throughout even if we have taken the vaccine, control our instincts to get back to normal lives soon and learn to deal with what could be waves of uncertainty in the coming months.

Having said that, in terms of accountability, the buck of course stops at the top, which is the Prime Minister. He must now quickly move towards establishing a separate ministry for Covid and have a competent minister and set of bureaucrats to man the same.  This ministry should be tasked with all activities related to Covid as an umbrella entity. Being pro-active should be the core mantra for this entity.  It should be acting on a WAAR footing – Watch – Anticipate – Act – Repeat.

As we have seen, unless we get out of Covid quickly, lives and livelihoods will be under jeopardy – caught in the ensuing waves of uncertainty.

Pic Courtesy: India Today

Budget -21, Reform push and Time to Market!

There have been budgets in the past which have sort of quickly moved away from the headlines. And there have been budgets which remained in the headlines but for all wrong reasons. This year’s budget, incidentally the 8th one from the Modi Sarkar presented by Nirmala Sitharaman has managed to hog the limelight for all the “right” reasons. The pun here is well intended.

Talking of the reaction to this government’s previous budgets, it’s always been muted and for obvious reasons. Ever since Narendra Modi became the Prime Minister way back in 2014 that too with a clear majority, the expectation has been that he will bite the bullet on many of the much needed, long pending reforms. Honestly, the previous budgets of the Modi Sarkar were mostly incremental budgets with some increased allocations here, some improved programs there and so on. “What’s the Big Idea”? ‘Where are the Big bang reforms?” were some questions hurled by the commentariat post every budget. It has been my observation that under Modi, the budgets have just become an annual statement of allocations and outlays while Big Ideas whether it was the Swachh Bharat Abhiyan or the Ujjwala Yojana et al were launched outside of the budget. But in this year’s budget, there has been a welcome change to announcing some “Big Ideas”.

The positive vibes around this year’s budget can be attributed to the announcement of few big ideas which have been reformist in nature, while keeping the budget free of any “bad news”. One is the announcement of the setting up of an Asset Reconstruction Company (ARC) which is a euphemism for a “Bad Bank”. Second, is the statement of intent on “privatisation” of two Public Sector Undertaking Banks and one General Insurance company. So far, governments have been taking umbrage under the term – Disinvestment without putting out the word “Privatisation” so openly.

Not just the budget, but the announcement has been followed up by speeches in the parliament and other forums by those who matter in the government, on the seriousness of the intent. In fact, as per news reports, Niti Aayog has recommended to cut the number of state owned Public Sector Undertakings (PSUs) to just 24 from over 300 that exist today. If this programme takes off, it will make Modi a reformist of “Thatcherian” proportions. If you recall, Margaret Thatcher way back in 1979, on assuming power systematically embarked on a reform program to revive the British economy. She deregulated markets, cut tax rates, removed exchange controls and consigned militant trade unions to oblivion. But, it is the privatisation of State owned corporations like British Steel, British Petroleum, British Telecom and British Airways that stays as her enduring legacy till today. So, what Thatcher achieved in the early 80’s in the United Kingdom is what Modi is embarking to do in India after forty years. That brings to the next point of this post which is the important piece of “Time to Market”.

In business, Time to Market is nothing but the time taken by a company to launch a product or a service from the date of firming up on an idea.  For companies, this is an important issue in new product introductions.  In businesses that are highly competitive or for that matter any business, you cannot afford to have a long Time to Market.  That would run the risk of your competitor getting ahead or consumer preferences changing that makes the idea less relevant or even redundant.  I believe that even in the matter of reforms for a government, a short Time to Market is critical. And as a country, our track record on that front is unenviable so far.

In the context of reform push, I believe there are three stages namely – Idea, Intent and Implementation. First, the idea is just floated in a budget speech or on important occasion/forum. Then the Intent is demonstrated when the idea is given a proper shape, laws are formulated if there is a need and resources are allocated.  Implementation is when finally the reform becomes a reality and is rolled out. So, in India if you see the history of Time to Market on important reforms, it doesn’t pose a pretty picture.

For example, take the case of a reform like Aadhaar. The idea and need for a unique citizens identity card was floated way back in 2001 by an Empanelled Group Of Ministers (EGOM) chaired by the then Home Minister L.K. Advani during the Vajpayee led NDA regime. It was only in 2009, when the intent was demonstrated by the UPA government led by Manmohan Singh with the announcement in the budget and then following it up with the set up if UIDAI (Unique Identification Authority of India) under the leadership of Nandan Nilekani. And finally, the first Aadhaar card was issued to a citizen in September 2010. So, from the idea to the launch it took a good 9 years. In the case of GST, from the time of the floating of the idea way back in 2000 to showing the intent in the budget in year 2005 to finally launching GST in India in 2017, it took seventeen years.

In the case of the policy of allowing 100% Foreign Direct Investment in retail however, from the stage of the Idea to Intent to Implementation, the landscape of retail has changed. India doesn’t still allow 100% FDI in multi brand retail. This was seen as an important reform in attracting FDI and employment generation a decade ago. But now with the advent of E-Commerce where 100% FDI is allowed in the marketplace model, 100% FDI in Multi-brand retail is no longer seen as a constraint. In other developing countries like Thailand foreign direct investment in retail gave a huge boost to the economy. But India missed that boom because of the dogma around FDI in multi brand retail which stretched the Time to Market on that reform.

Ergo my point is, if the reforms which have been announced in this budget have to make an impact, short Time to Market is critical. Having floated the Idea of a Bad Bank, it is important to follow up quickly with the formation of the ARC and eventually roll it out within this year itself so that the PSU banks can be freed of the stressed loans and they can get back to lending with more ease. Similarly, in the case of privatisation of PSU Banks, the idea has been floating for a while now. But this is the first time, the government has expressed its formal intent via the budget speech. The road to privatisation is not going to be easy at all with trade unions already gearing to pick up the gauntlet with the government. I though believe just as the mass VRS issue in PSUs like MTNL and BSNL etc. went through in spite of stiff resistance from trade unions, this time, the government may be able to pull it off with a few hiccups. Or so I hope.  Also, while the stock markets are on a high this year, the government can manage to get better valuations.

In the run up to the 2014 Lok Sabha elections, Modi repeatedly talked of “Less Government, More Governance” and “Government has no business to be in business” – thoughts which signalled a clear Rightward tilt on the economic philosophy front. However, till this budget speech, we didn’t see much of action towards withdrawing the government from running many businesses. This budget from that sense is critical in signalling the government’s intent towards moving away from running inconsequential businesses, which is a good sign. And, if the intent is translated into action in a reasonably short Time to Market, then it will be Narendra Modi’s lasting legacy in changing the economic course of this country.

Post Script: If Aandolanjivis are those who make a living out of protests, what about taxing them? And what would be the Time to Market for this idea? 😁

Thank God It’s a New Year!

In all these years so far in my life, never have I seen such wholesome relief in people on the passing by of a year. Year 2020 has been one of a kind. Not that there have been bad years before. But in the past, a year would have been labelled annus horribilis probably due to a natural calamity, a sad event/s, an economic bad spell and so on. Also, it so happens that a year turns out to be worse for some regions/countries in the world and better for others. But 2020 turned out to be a disaster for almost most part of the year due to the Corona Virus which did not spare any part of the world. The same time last year, as people ushered in another New Year with the usual sense of happiness and glee, none saw it coming. By April, the world was scrambling to lock itself down to save itself from the raging pandemic. Even as I write this, the pandemic is not behind us fully.

Any New Year usually brings in a ray of hope. A hope for better things to come.  2021 I guess, has been mankind’s most anticipated milestone. And people have not just been looking forward to a ray of hope but a landscape of hope. One just wanted to leave behind the horrors of living through a pandemic year and lead a normal life.  By the end of 2020 if you had asked me to name the phrase I hated the most, it was ‘New Normal’.  It still is.

Coming to India specifically, the year 2020 indeed turned out to be bad. Yet, I would reckon that we as a country came out of it relatively unscathed.  Of course the economy took a humungous hit. Of course lives were lost. Of course the common man had to go through hardships. Of course senior citizens had a tough time coping up. Of course people lost jobs. Of course migrant labour had to migrate without a hope. Of course earnings of people took a beating. Yet, if one looks at the situation now, we should consider ourselves fortunate to have bent the curve decisively, got away with fewer deaths per million compared to many other countries and be in a position where life seems to be getting back to the “Old Normal”!

Leaving aside data and statistics, there are other reasons that made me say that as a country we came out relatively unscathed.  First our size. We are a population of 1.3 billion. Second, most of the cities and towns in our country have a very high population density. Also, much of the population does not have the luxury of space. Third, our general civic standards though improving by the day, still has a long way to go.  Fourth, our propensity to not follow rules and not be disciplined overpowers our propensity to follow rules and be disciplined. Fifth, our overarching credo of ‘Chalta hai’ has ingrained in us an attitude to take things lightly without getting overly concerned. And finally, the lack of adequate medical infrastructure in the country. All this doesn’t at all augur well for a country like ours to handle a pandemic like Covid. Add to this, the complexities of being a democracy and a federal democracy in that where, a central writ cannot run across the country! Throw in the fact that this is the first time that a Covid like pandemic of this scale has stuck India because of which we don’t have established SOPs or tribal knowledge to handle the situation. All these are recipes for nothing else but social tension and unmitigated economic disaster.

The reality as it panned out has not been so bad.  There has been no visible social tension in the country. The only tension we see these days is “Social media tension” between those who support Prime Minister Narendra Modi and those who oppose him. In fact, the not so privileged have shown tremendous resilience in dealing with the crisis. During the last few months, I have been in constant touch with a cross section of common people who touch our lives and who would have been the most affected due to the extended lockdowns. They have all taken the unfortunate fallout of the pandemic in their stride and have got back to their normal lives now. None of them blamed the government for what it did or what it didn’t do. They all politely refused any offer of support and claimed that they were managing fine. This picture is totally opposite to what one gets to read in columns of the commentariat where the Modi Government’s lock down is being pilloried for what it would have inflicted on the poor.

Further, as an economy we seem to be bouncing back quicker and better than expected. To quote economist and famed columnist Swaminathan Anklesaria Aiyar from one of his recent columns, he says, “First, India has proved far more resilient than expected after the terrible first quarter of Covid. Second, India has been resilient despite having among the smallest fiscal stimuli among major nations.” Again, we have managed without actually doling out cash support which was what was touted as the silver bullet for stimulating the economy by almost all the top economists except those who were advising the Government.  Looking back, unlike a country like US where people like to spend, Indians are conservative in nature and would like to save for the rainy day. So, in a pandemic situation, I feel that people would not have spent even if money was transferred to their accounts. Instead, it would have only been kept aside for savings, which in the final run would have been detrimental to the cause of stimulating the economy. In that sense, the approach of the Government in providing free food grains to the needy or loan support for small businesses etc. seems wiser steps for a country like India.

The New Year has been rung in India with the best possible news of the approval of the vaccine for Covid.  Based on the last few months trend, it is clear that the manufacturing and allied industries are on a re-bound. With the dip in numbers and the availability of vaccine, hopefully, the services sector like Travel, Hospitality, Tourism, Food & Dining and related verticals will also see a quick recovery after which, we can say that we are reaching a “Normal” state.

As we segue into a New Year, my wish has become more grounded and guarded. As one exults “Thank God It’s a New Year”, here’s wishing one and all a New Year 2021 which will be just Normal and that will turn out to be an Annus Mirabilis!