Life after COVID: India is staring at painful structural adjustment

COVID will trigger a string of painful restructuring initiatives in India. Automation and job loss are imminent as labour intensive sectors may be forced to take safeguards against future shocks. Initiatives are also expected in population control. Digital India campaign may get a popular traction, opening new business models and opportunities.

Hyderabad: Faced with a disaster, India is now caught up with the immediate task of saving lives and offer reliefs and rehabilitation. The scene will change a few months later, when the nation along with rest of the world will be facing an even more difficult task of reconstruction.

Corona virus outbreak challenged many set notions of business and economic operation; and once the lock-down is lifted too many Indians will find the world around them crumbling like a house of cards.

What now appears to be a health issue, will lead to painful structural adjustments.

Automation and job loss

Automation, increase in organized activities and job losses are distinct possibilities in post-COVID world that will look at safeguarding economic activities from human intervention and infection.

The cost will be heavy on sectors which are low on automation.

Take the case of highly labour-intensive tea plantation sector. The health emergency may not only cost them premium first-flush (March) teas; but the crop-cycle may also be disturbed, inviting wider ramifications.

A septuagenarian tea-planter from Tamil Nadu feels large scale use of artificial Intelligence-led technology can insulate the industry from future shocks.

The idea is to reduce dependence on labour. At stake are, 11 lakh jobs and the century-old labour-cost arbitrage-oriented business model.

Plantation is not the only sector that would look for long term answers.

Lock-down taught India that ensuring movement of cargo trains is not enough to reach supplies to the user.

Rake loads of fertilizer remained stranded as the authorities either faced labour shortage or were afraid of deploying too many labours and risk community spread of infection.

It takes hundreds to unload a rake. Such operations may henceforth be mechanized, to keep the nation going during crisis.

Sectoral interests will be ignored by larger national or international interests. If the Indian planter is reluctant, his overseas buyers – consuming one-fifth of the country’s tea production of over 130 crore kgs may force it; the way they imposed many food safety restrictions, in the past.

World at the cross-roads

COVID will raise many fundamental questions on global growth strategies and its link with the repeated virus outbreaks like Ebola, SARS or COVID that are not imported from some other planet.

After the cold-war era, the world focused its attention in maximizing growth opportunities created by China.

The growth came at the cost of nature. Fast destruction of natural habitats, where the viruses were safely coexisting with wildlife, triggered the problem.

The post-COVID world may take a very hard look at the past strategies. Environmental concerns should rise. That is good news for renewable energy but; bad for mining, mineral and coal-based power sectors.

Ensuring public health will be a global priority to prevent any more pandemic.

But till such concerns are removed; service trade like travel and tourism, hospitality, transport, aviation etc may face new hurdles, with added cost and revenue implications.

Impact on service trade should also impact goods trade. For example, power gears imported from China come with service obligations. In case of restrictions on travel, demand for such equipment may suffer.

Population Control

The complications are significantly high in India where service trade contributes nearly half of the GDP and, as in 2011, nearly 45 crore people migrated within India for jobs.

The living and working condition of such labour will surely attract attention post-COVID.

Construction sector may face stringent restrictions.

The focus on public health and sanitation may increase the cost of labour adding economic logic to automation.

The video footage of humanoid robots delivering medicines to patients at COVID-19 isolation ward in a Tiruchirappalli hospital may become a common feature in hospitals.

The debate over possible rise in unemployment and more pressure on agriculture may help the government to take up the taboo subject of population control with right earnest.

The disturbing images of migrant workers walking down home, hundreds of kilometres away, may act as a wake-up call.

A private member bill in this regard is now pending in Rajya Sabha.

Boost to Digital India

Parallel to the prospect of job loss and economic turbulence; COVID-19 outbreak has also opened many new opportunities.

It was fascinating to watch that an apparently simple caller-tune campaign can sensitize masses, so effectively, about the impending danger; and send a country of 130 crore indoors, with minimal use of force.

What is more fascinating is, the lockdown failed to bring the country to a complete halt.

People conducted banking operations. Groceries reached home (with some disruptions). Bar on physical movement didn’t bring business operations to a halt; as people worked from home.

After a week of lock down many private schools resumed operations but on e-mode. Teachers and students attending classes in full uniform. The opportunity was created by digital technology.

A Kolkata-based enterprise which was in the business of taking out professionals for overseas conferences is now holding similar seminars on digital platform.

For now, it’s a survival strategy. But, who knows, that it wouldn’t be the trend tomorrow?

COVID helped India explore the full benefits of ‘Digital India’ campaign launched by the Prime Minister in 2015. There is high possibility that India will gear up to make best use of the facilities in the days to come.

Corporates may consider allowing a section of employees to work from home, so as to reduce both cost and social contact risks.

Schools and colleges will make greater use of e-learning platforms. More people may prefer doorstep delivery of groceries and vegetables, giving a boost to e-commerce.

A major behavioural change is underway and that will open new opportunities.

Domestic manufacturing

Change will also rock the manufacturing sector.

Restrictions on trade were already rising. COVID might escalate it to the level, where countries like India may willy-nilly go back to the earlier formula of self-reliance, with some modifications.

In a notification, issued on March 17 days before the lock down the Department for Promotion of Industry and Internal Trade (DPIIT), escalated the local content requirement, on a range of electrical equipment used in electricity distribution sector. The targets are to be met in a phase-wise manner, over the next three years.

Anand Mahindra has rightly forecasted Corona virus as a “reset button” for the world.

(Written by Pratim Ranjan Bose. He is a Kolkata-based Senior Journalist. Views are personal.)