 This is the third and concluding article in a series on the economic impact of COVID-19 by Sumit Bothra |
The second and third quarter of 2020 have been tough on economies around the world. People, who were once globe trotters, are now forced to live a restricted life and in some places and situations even a sort of confinement. There has been an unprecedented shift even in the way people now think and operate. The consequences of COVID 19 are being felt around the world. It has widely affected economies, businesses, labour and even global supply chains. The health and livelihood of millions is now threatened.
As we restart our economy, post the pandemic and as per the (now cliché) “new norm”, let us look at the short term impact and the long term implications. Gatherings of people are restricted. Social life will probably never be the same at least for a while, until people regain confidence and safety in terms of health and wellbeing. Business and the style of working will change as well. In the work place colleagues work sparsely and preferably in isolation. Work from home is now a necessity and seemingly is going to be the way people will operate. Conferences are a thing of the past.
International and domestic travel is restricted. Co working spaces, large office campuses, shopping malls will have to be redefined. Owners of cinema theatres, restaurants, bars and clubs have no idea on how they will do business after they reopen. The accumulating losses may cause them to shut down. Every business is faced with similar worries and the thought of reorganising and adapting to it is on the minds of all business owners.
Recent data and daily figures show that the effects and the spread of the pandemic are rampant in the urban areas when compared to the rural parts of the country. The high density of people in living areas as well as work places makes it a challenging task for the authorities and civic bodies. The unified and concentrated efforts of multiple agencies on the field are still not enough to contain the spread of the disease. The collective resources of the government are focussed on controlling and managing pandemic situation.
It is not before long that government will have to think about reorganising and redefining the economy and the way it functions. This could cause people to move away from overcrowded and unplanned cities. Migration of people to cities happened primarily for education, healthcare, employment and business opportunities. While this was the major reason for the development and growth of cities it also caused a huge stress on urban bodies and the natural resources in urban and suburban areas.
A major part of our economic activity comes from the services sector. Activities in the service sector include retail including e-commerce, banks, hotels, healthcare, education, ICT services, media, communications and civic amenities. Most of these activities could efficiently be provided from towns instead of them being heavily concentrated in the urban areas. Availability of high speed data connectivity available makes this easily possible.
The manufacturing sector is the second largest contributor to the national GDP. The young entrepreneurs from the non-metropolitan areas could do well if they could fulfil their ambitions being in their home towns, with access to better living conditions that they already have. They would enjoy better health and less stress being there rather than moving to crowded spaces in already overcrowded cities.
Countries that could sustain the lockdown did so because of two major reasons. The first being the agricultural sector and the second is domestic manufacturing of product of daily needs. This evidently proves the great untapped potential for young and educated population to look at agriculture as a primary source of income. Using technology and connectivity they could overcome the traditional shortcomings of the traditional farmers and be able to get better prices for their produce.
Affordable and available real estate in the towns coupled with availability of cheaper labour will reduce the costs of starting and operating business. Manufacturing in towns will make products and services cheaper. This will also spur growth in towns and help to create better infrastructure that will spread into every state. Development of towns will also create employment spread out across the country and help the country move faster towards the targeted greater economic growth and achieve self-reliance. We will be in a better position to buy import substituted products cheaper. We will also be competitive in the international market enabling better exports.
Companies will look to shift at least part of their manufacturing facilities centred in one region to multiple locations overseas to continue to enjoy the benefits of low costs of production. Countries in the Asian region and the Indian subcontinent stand to gain immensely when this happens. Manufacturing of automobiles, ancillaries, FMCG goods, electronic hardware, ICT hardware and services, renewable energy as well as agricultural produce, processed foods, dairy and fisheries could well be sourced from this region. The region has been successful in providing a good industrial climate. They have provided low cost labour, sufficient power and good supply chain and logistics in the past.
The South East Asian region could well be the production and logistics super hub. This new era of reorganisation will bring to the forefront countries that keep investors happy by offering shared prosperity and security.
About the Author:
Sumit Bothra is an international business consultant and a scholar pursuing International Relations at the University of Madras, Department of Politics & Public Administration. He can be contacted at sumitbothra@gmail.com
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