Now To top priorities for this task force, one is to understand that we need to move from what I call a business-as-usual economy to a warlike economy. And the principles to run a war like economy are very different from the principles of running the business as usual economy. So obviously we have to take a call whether we need to move toward war like economy now or later. but we must be prepared to do that. And that is very expensive and very disruptive. Because if that overriding objective Is Not met – the war is lost. So to bring the bowl, you can only have one objective in mind and the economic objective, we will have to have a warlike economy. Not just human objectives.
Negative is how do we prevent this coronavirus crisis from destroying the Indian economy. How do we prevent this crisis from impacting the incomes and therefore the GDP of the in the economy to the maximum extent possible? That’s a different question. That’s an economic question from what do we do to reduce the impact of the coronavirus have on people’s health, right?
So I think what we have to do as the first thing that comes to me, to do is frame the question in this fashion and then proceed to look for Solutions. So there are two areas, therefore, they have outlined one is how do we protect National wealth? an example that I can give you if an airline is going broke today in India. It is going broke and you will not be able to fix it by reducing taxes to zero and even if they sold tickets for a hundred rupees, still there is no one to fly; right? Because the reason why they’re not flying in the market event. So the Airline in the interim is paying wages and is for paying interest on the debt, if it chooses to do that without support then the airline will destroy its wealth and they would be out of business.
The first potential way to protecting this company would be for the government to come up with measures that make sure that to support the business model, which is broken. The usual business model is I hire people for production. I borrow money. I spend it. Selling my stuff, I earned revenue and that Revenue pays for these factors of production and that is broken.
So how do we intervene to make sure that that is not resulting Vector instruction?
The second is, by not allowing the destruction, you will automatically protect a large section of the former economy. You will not be able to make a company overnight. The second question becomes is the much more difficult one, for example, 30% of the total employment in this country comes from construction. It also contributes an equivalent amount of value of not valuing ideas for your firm. So construction is not going to obviously be back in quickly if I protect my assets, so what do I do? Our first priority should be to make sure that the people who are working in construction, Don’t suffer from loss of life. Now as you notice, I have not used the word government because these two things government the private sector civil society and other stakeholders will all have to play a role for the third thing. that the task force we need to do is figure out the respective roles of people ending in addressing these two problems. I think those should be the two plan.
The medical problem and The Economic Consequences of medical problem is a different matter and you don’t need a multi-stakeholder task force for that. Yeah, you know so the question is about when a lot of the commentary has been that nations across the world seem to have already enrolled and outlying their economic measures, whether it’s the USA or it’s Canada but we seem to be still waiting to assess the situation. Now, we’ve been some would say ahead of the curve or on track in terms of measures to avoid the virus spread. And our numbers of those Do you think we’re behind the curve on economic Solutions?
Absolutely, not in terms of the economic measures that the government has taken. These are basically two things. They are precautionary measures and then the government has indicated his willingness to intervene to handle short-term measures that need to be taken as long as this crisis stays in Phase 2 and does not develop, you know, this crisis doesn’t move into a phase 3 crisis.The extended social isolation is going to be palpable on both economic wealth. So the question is not whether this is the way. So do we have a plan to deal with when the need arises? I don’t know but I would not be privy to these conversations. I hope that is informative. But I would urge companies that could be formulated bearing in mind that we are transiting from business as usual economy to a warlike economy.
Cash transfers to low-level workers are very important. And of course, you must consider them. But more important you think of cash transfers not as cash transfers, not as Victorian charity. Yeah, but as income, so again I go back to when you support companies to maintain their payroll and maintain and make their payments in the absence of a revenue stream. What you’re trying to do is not destroy National Bank. When a construction worker loses their livelihood because of a lockdown or because of social distancing, the government should try to support that person by giving them money to compensate them for their loss of income. So it’s not just cash transfer but Income Support.
of course, it is feasible with cash transfer with one caveat the supply chains have got to work. If potatoes that today cost 30 rupees suddenly because of supply chain disruption the price of certainty hundred rupees because fewer potatoes are coming to the market then someone like me with elbow out the person in construction because he will pay 300 rupees the fact that we have supported their week when potatoes cost. Thirty rupees will not enable them to food potatoes with this new price. So we have to pay very very careful attention the supply chain as well when you provide income support through whatever means.
speaking about the supply chains so far, We have seen the supply chains looking at some stress but largely working mostly, what we see is people trying to hold in cities in smaller Pockets. What can the government really do to ensure the supply chains work even as we go down this path of extreme social distancing? Supply chains will be disrupted not by hoarding. That’s temporary. And I wouldn’t worry too much about it for now. But understand that the supply chain to be disrupted because the people the very people are lost income in the informal sector. They are the People who are responsible for the supply chain for getting food grains from Farm to Market today because that supply chain is not like Bigbasket or Amazon, that supply chain is not an online firm.
That’s only for rich people like us. that the supply chain is a cool brand. But where lower-middle-class people shop, if these are going to be shut and people don’t Have an income then that particular supply chain would be disrupted. So one thing you can do is to devise policies that restore that supply chain consistent with social distancing which being want some trade-off in social media. That would be to be seen in Europe to study it or you actually use both like instruments to maintain the supply chain including but not limited to, your government Machinery. I would like Community organizations, you get them engaged even the Armed Forces. To make sure that the supply chain has been cleaned and thereby you can then provide incomes. So it will depend on the context of that.
We must have a plan for Phase 3, So assuming we have this plan and assuming that unfortunately, we moved to phase 3. we know that the disruption will expand exponentially and we really have no clues when we get vaccines excetera. Therefore the answer is the same as in the world. You fight the word to minimize the disruption as long as you have the resources to do it. You don’t ask the question. How long will we have the resources to do it? If you ask that question in what time and amount of resources you would have two and only two Alternatives 1. ceasefire negotiation or 2. Surrender? Regrettably, you know what life situation with the pandemic in neither ceasefire not surrender. So you must persevere until the last If there is multilateral action to help this perseverance, the global level that would be helpful.
If there is a silver lining at all for several businesses, small businesses large businesses, you know, they’re looking at how this new reality can throw up new ways of doing things. If I was to extrapolate that to the Indian economy and the way we run the economy. Do you think there is an opportunity there in terms of we looking or maybe our social security?
we have to focus immediately on the immediate problem. And the immediate problem is to make sure that you protect the people, that income is provided as we discussed and that we are rapidly able to build up our pandemic resisting capability. And I think we should focus on that whether or not, of course, it will continue to impact the GDP, but rapidly begin building up our transient pandemic resisting capability in the Health Care System. Means like in a war-like situation that when I try and make a hospital bed, I don’t just build a hospital as I would do in a business as usual. I examine whether there are other structures especially hotels that are fit for purpose to build Hospital bed and then we repurpose. So a lot of the change in economic activity will involve repurpose. We must Focus first given that resources even with our ability to print money Etc are limited to the extent that the investments we can make now must yield rewards in the short term. So repurposing billions will reward in the short-term. Both in terms of helping us fight this war with the virus to an end and with the purpose of using otherwise.
we will need to build infrastructure and assets to fighting this war. We must put money into protecting our doctors and our entire. That’s going to be expensive like Britain started ramping up its aircraft production of Fighters when before the Battle of Britain in 1940. So they had Fighters but what they Project Forgotten was they lost violence and say for the variety of planes, but no Pilots so the valuation. Big money we spend on protecting our medical staff.
People involved in fighting this battle medical and non-medical would be many times more in value than what it would be on the business as usual and we have to recognize that and cost for it. Those are the sorts of measures. We should be worrying about rather than what we will do to renegotiate our supply chain with China Etc. This is not one of those things that will happen in the medium term, but we have to executing those Vision. So therefore we must use the resources we have now to execute measures to fight the virus to repurpose the economy to fight the virus to protect National economy.