Business as Unusual in Lockdown
Social distancing is the new world order. As of now, it is the only effective intervention against the Covid-19 pandemic. It's more stringent version, lockdown, however, comes with severe side effects like loss of jobs and decelerated economic growth. But the Narendra Modi government has made its approach clear and taken the tough path, as it extended the all-India lockdown from April 14 to May 3.
Even in its initial response, the government had rightly put lives ahead of the economy. The first phase of the lockdown slowed the spread of the virus, buying time for the local authorities to ramp up medical infrastructure, set up isolation facilities and ensure supply of medical equipment. It is likely to continue in some hotspot districts even after May 3.
It comes, however, at a debilitating cost to the economy, impacting livelihoods, social security and jobs. “If it is extended to end May, the additional cost will be 9 per cent of the GDP,” said Arvind Virmani, former chief economic adviser to the government. Economists say the current crisis is far worse than the one in 2008-09. The 2008 slowdown had its origin in one country and it created ripples across the world. But Covid-19 is leaving behind destruction simultaneously across the globe. All economies are in recession, and there might not be a solution in the near term.
The IT sector, however, does not see any light at the end of the tunnel. Its main revenue generating markets, the US and Europe, have been severely hit by Covid-19, and it is likely to have a long-term impact. According to a recent report by the research firm International Data Corporation (IDC), there would be a decline of 3-4 per cent in global IT spending. “Given the complex business scenario today, most of the IT companies have to keep pace with maintaining client deliveries with most staff working from home. The new business development will see a much slower growth rate for the next two quarters,” said Deepak Mittal, CEO of TO THE NEW, a digital technology company.
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