Pandemic

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.

“JUST” learning to live during the pandemic!

Vijay Yadav* is a small time vegetable and fruit vendor who has been carrying out his business in Mumbai since 2 decades now.  Ever since the lock down, in our apartment complex, he is one of the suppliers of fresh vegetables and fruits. Twice a week, we place order over WhatsApp to him and he delivers the same at the parking lot of our building. He informs us the due amount on WhatsApp and we pay the amount due to him through Google Pay.

22nd Aug, 2020 was Ganesh Chaturthi. Due to the current pandemic situation, we couldn’t go to the local market for Pooja related shopping (different types of Flowers, Garland…) on the eve of the festival. When we were wondering what to do, Meena*, our regular flower seller informed us to our pleasant surprise that she will home deliver whatever flowers and items we need and asked my wife to send the list over WhatsApp. On the 21st evening, the list was delivered at our ground floor. She informed us the amount and we made the payment to her through PayTM.

On 22nd Aug was also our Avani Avittam (Janeu changing ceremony) for which our regular Cheenu vaadhyar (bhatji) sent us the YouTube link to join him. From home, we completed the rituals and promptly sent the Acharya sambavana thro Google Pay.

In between we had to consult for a routine ailment with our Homeopath doctor.  We did the same over phone. He said he will send the medicines to our house within 1 hour. He has a tie up with Swiggy and the medicines were delivered at our doorstep. The doctor gave his UPI id for transferring his fees, which we did.

What is common in all these? It is that we and the other parties involved were able to carry on with life even during the lock down period without stepping out of our place, fairly smoothly. And if you look at it closely, this was made possible through a combination of Smart phones, Bank accounts (to which we could transfer the money) and more importantly the UPI platform through which we could transfer money real time into bank accounts of beneficiaries.

It was Dr. Arvind Subramanian, Ex-Chief Economic Advisor to the Government of India who in his 1st Economic Survey document coined the term – “The JAM Trinity” and said that the potential of Jan Dhan Yojana, Aadhaar and Mobile phone could be harnessed to plug subsidy leaks and ensure a more targeted delivery to those needy.  This was the beginning of Modi’s 1st term during which, the government gave a huge push to opening Bank accounts for the poor through the Jan Dhan Yojana and also advocated the use of Aadhaar for identifying the needy.  However, in the aftermath of Covid-19, I would tweak the JAM Trinity and say that it is the “Quad of JUST” which is helping to keep the bottom of the pyramid afloat during the pandemic.

If you look at the examples I have provided at the beginning, you would realise that even with the unexpected strike of the pandemic, what has been sustaining at least some fraction of the economic activity is a combination of

J (Jan Dhan Accounts) – through which we could transfer money to beneficiaries who are not so privileged like Domestic helps, small time vendors and so on.

U (UPI Platform) – without which money transfer to bank accounts through mobile wallets like Google Pay or PayTM for example, couldn’t be so easy and swift.

S (Spectrum) – as in the advent of 4G which has made data usage cheap and ubiquitous in India

T (Technology) – Without which all these would not have been possible at all.

In this four, I would like to focus on the UPI bit. United Payment Interface (UPI) developed by National Payments Corporation of India was launched in India in April 2016. But it was post the Demonetisation that UPI as a tool got its fillip in terms of adoption and usage. Just look at the numbers. From just 21 banks who were part of UPI in 2016 when it was launched, today it is more than 140. The transaction volumes have grown exponentially from 2.06 mn. in Dec 2016 to 1.49 bn. in July 2020. And in terms of revenue, it has gone up from Rs. 13.17 crore to Rs. 29.05 Lac crore in the same period!!

It’s been so much of a runaway success that Google (which is part of the UPI through its GPay product) has written to US Federal Reserve Board urging it to build a similar faster payment service platform in the US citing the case study of UPI.

As documented very well by Shankkar Aiyar in his book, The Accidental India, in post Independent India, almost all of the successful economic transformations happened as an answer to a crisis. Similarly, the success of UPI in India also, could be pointed towards the cash payment crisis situation that resulted due to Demonetisation in November 2016. While Demonetisation might not have yielded the originally intended objective of the government namely to suck out the black money from the system, I feel that it has delivered or still delivering other positive outcomes.

Among the top is the formalisation of the economy which is a Work in Progress. The huge success of UPI has made conducting business smoother and easier even during lock down times even for the micro business community. At the same time, the added benefit is the expansion of the formal economy where less and less transactions happen through cash.

The last few months ever since the pandemic struck, have been testing times for any country and its economy.  It’s my feeling that after the initial complete lock down phase of two months, Indians have accepted the reality and have started looking at ways and means of getting on with their lives even without any dole from the government in the form of cash support. Purely from the stand point of micro businesses, they have all tried to adapt their business models to at least survive and stay afloat. Accepting orders through WhatsApp, doing home delivery and equipping themselves with online payment options are some of these adaptations. And these may very well stay even after the pandemic is over. In that sense, while the media commentary (when not busy with Sushant Singh’s death that is) could be around doom and gloom due to Covid in India, the common man has learnt to live during the pandemic with the “Quad of JUST” and will to survive.

Postscript: Way back in November 2016, in the aftermath of Demonetisation I had written a post titled Cash Mukt Bharat (Read here) where I had fantasised of an India where cash transactions have reduced completely by 2025. We are in 2020. Looks like many things mentioned in that post have already become a reality.  Amen.

*All names changed.

Pic courtesy: Yourstory.com