Dr. D. Mukhopadhyay
The experts from all over the world are found to be non-unanimous on the issues concerning the timeline of economic recovery and bouncing back to the point of normalcy with regard to commercial operations and getting the industrial wheel on the economic tract. In, simplicity everybody is unanimous on uncertainty of future , continuity of infections for uncertain timeline and simultaneously consumers’ confidence may erode and could be weakened further by restrictions on tour and travel and community as well as mass gathering. Adverse economic impact shall continue persistently to eclipse the global economy for an indefinable period of time. As such, it may not be irrational to presume the persistent continuity of slowdown in global economic growth and many economies have already experienced negative economic growth during the first quarter of the Financial Year 2020. Therefore, it is an imperative for the global society to prepare for economic sustainability . This write up aims at throwing light on economic impact , recovery and certain commercial practices the corporate captains and the decision-makers in general should strategize for managing uncertainty and the fluid economic environment the country is passing through. Outbreak of COVID-19 started taking place in full-fledged manner all over the world from February-March , 2020 and the civil aviation , tourism and hospitality sectors are the worst sufferers. These sectors of the economy have been suffering from lost demand and customers are presently devoid of confidence for availing services including eating in restaurants and how long is needed for recovery of lost demand is very difficult to forecast. Other sectors of the economy may be subject to delayed demand. Demand for buying consumers goods shall be deferred and they shall be subject to discretionary spending habits. The Pandemic is likely to significantly affect economic growth of the country . So far, it is more or less known to the people that global recession is inevitable due to adverse impact on economic growth and it appears to be quite uncertain when and how many phases recovery will take place. The number of COVID patients is increasing by leaps and bounds in the country and the surged figure is almost five lakhs. Moreover, it is very difficult to maintain the uninterrupted flow in both inbound and outbound supply-chain and logistics services. Though many firms are putting their best efforts to minimize the voluminous business loss by initiating quick bouncing back which is just temporary in nature as the overall economic scenario is opaque and hardly transparent due to which it is perhaps impossible to adopt long term strategies for gaining momentum in the industrial wheel of the economy.
The manufacturing sector is the worst sufferer as it is very difficult to provide immunity and protection to the workforce in shop floor level , ensuring stabilization in the supply-chain, customer retention and assessing and forecasting working capital cycle under uncertain and more fluid-like situations and forecasting requirement of working capital. The purchasing power of the people is badly affected and the available budget is getting prioritized and diverted more and more to medical and health care expenditure mitigation. The business captains and decision makers do have hardly any options other than addressing medical safety and protection of health of the employees and business challenges due to uncertain demand of goods and services in the markets . It is evident from ongoing research that the virus causing COVID-19 is easily transmitted from person to person and social-distancing used as an immediate available tool to control infection transmission . On the other hand, socializing and physical interaction among the people is almost a must for uninterrupted economic activities. The small and medium size firms are worst affected by persistent economic slowdown and it is obvious that less developed and developing economies’ degree of sufferings shall be more than the advanced economies and the recovery rate of these economies is also expected to be higher than the less developed economies and Indian economy can hardly escape from this burn.
The population size of India is another bottleneck in the path of economic recovery as the government’s budget allocation is supposed to be directed to non-asset creating activities and it is a fact that only the created assets help in generating income but budget allocation for non-asset creating expenditure shall foment enlarging fiscal deficit. Further, revenue collection mainly in terms of indirect tax and direct tax to certain extent shall be affected due to non-operation of economic activities in full swing. It is worth mentioning that airlines industry in particular and aviation sector in general is the worst casualty as there has been eye-catching decline in passenger traffic. Normally, airlines industry experiences peak demand of service and passenger traffic volume reach the zenith during Summer being the peak travel season. As a consequence, bankruptcy including suspension of allied business depending on the aviation sector is inevitable. There is drastic fall in global GDP(Gross Domestic Product) which is the outcome of cumulative drop in national GDP of almost all the countries in the world. More particularly, oil and gas sector is adversely affected to the significant extent and oil prices are likely to continue to stay much lower during 2020-2021 Fiscal Year unless something miracle happens. Therefore, outbreak of COVID-19 has already eclipsed the national economies of the respective countries and it culminated into producing adverse impact on the global economy. Under the stated economic scenario, economies of the respective countries affected by COVID-19 including India are on look out for a workable approach to overcome the menace on account of the prevalent pandemic so that recovery can start . In this context , it may not sound naive to assert that non-programmed decision making approach is like to generate desired result under the pandemic impacted business environment. Every firm belonging to any sector of the economy needs to have eyes on the movement of the virus and should take responsive steps accordingly. The companies should give more importance to facilitating medical safety , healthcare and welfare of the employees and staff in order to generate positive energy and transmitting the same across the length and breadth of the organizations. Contingency plan may generate desired result for managing financial stress of the organization. It is to manage logistics and supply-chain cost judiciously by ensuring efficient monitoring movement of the raw-materials and finished products. The marketing wing of a firm should take care of the revenue budget by responding quickly to the customers’ needs and meet the same . Corporate communication , liaison and coordination functions- team needs to be remaining effective at the top gear in order to bridge any gulf in intra-departmental as well as inter-firms communications, international coordination and two-way hot-line communication system should be in place between the top management and rest of the departments and regions across the country and across the globe. It is very important to act timely for order procurement and ensuring timely delivery with zero penalty, zero re-work cost and zero free after sales service cost in order to make the products sustain the competitive price because price is the function of cost. All the organizations belonging to both the public sector and private sector are to address and take the help of cost minimization strategy and cost management is the nucleus of cost minimization strategy. The firms have to produce at such cost and price the products and services keeping parity with purchasing power of the customers for long term sustainability under the pandemic economic environment. Revenue and cost are critical variables and they alone can define the success or failure of the business. The firms are to adopt aggressive online marketing strategy and should commit investment for strengthening push sales strategy by giving adequate attention to quality of the products and this investment shall be more or less permanent on distribution channel as chance for change in customers’ preference of pre-COVID-19 is quite bleak. It is apt to assert that online business model is going to rule the market for indefinite period of time. By empirical observation, it may be summed up that pandemic on account of COVID-19 has created adverse impact on employment , disposable income of the individuals and over and above all commercial operations. Status of retail sales and overall consumption has drastically been downgraded and confidence of the investors has been punctured by the adverse consequence of stock-market crashes that have shaken the world economy at large.
However, positivity in actions to manage the on-going economic crises on the part of governments of different countries including India is mentionable. Government of India has designed and rolled out economic packages in order to maintain flow of blood circulation in the length and breadth of the economy by providing readymade cash-flow and supporting business investments. It is worth mentioning that a new breed of professionals for managing emergent crises like the prevalent pandemic has also been added to the existing workforce whose added capacity and calibration shall definitely help the country to mitigate any socio-economic crisis likely to emerge in future. Optimistically speaking, let us hope that the pandemic shall pass away soon and all of us shall remain eyewitness of the transformational change in the way we think and act individually and collectively the nation as a whole for mitigating the disaster appearing without any signal. This appeared as an opportune phase for everybody to ponder how the nation shall move forward.
(The author is Professor of Management and Dean-Faculty of Management & Dean-Faculty of Humanities and Social Sciences, Shri Mata Vaishno Devi University, Katra, Jammu & Kashmir, India)
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