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APRIL 2020 T H E W E A LT H M AG A Z I N E ₹ 150 INR

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BAZAAR MAGAZINE - VOLUME 0220-1

MODINOMICS
IN THIS EDITION OF
BAZAA₹ MAGAZINE
Bazaar Brief : SENSEX,
NIFTY nosedive P5
SMEs need more than a
stimulus package P6 PUT TO THE TEST
P7
Adapting to a work from COVID-19: Battling the Will the 1.73 lakh crore
home lifestyle P11 biggest threat to India Inc fiscal stimulus be enough?
 BAZAA₹
A Wealth Group
Publication

India Edition
April 2020

M AG A Z I N E 12 pages
Price ₹ 150

FROM THE EDITOR

SAMIT SHARMA
Executive Editor,
Bazaar Magazine India

Dear Readers, For more great

We are in the midst of perhaps the worst crisis humanity has faced in content from
modern times. The coronavirus epidemic has claimed countless lives
and uprooted millions of families across the world. In these pressing
times, I urge you to aid, assist and donate to the needy. And on behalf
of the entire Bazaar magazine team, I thank those at the frontline of
BAZAA₹
this epidemic.
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The Viral pathogen that is COVID-19 has also shaken the markets and online—24 hours a day, 7 days a
economy. Global economists have predicted the onset of a recession week at bazaatmag.com/sub
much worse than any before. India too has been deeply affected by Get answers to frequently asked
this economic blow. questions, assistance and more
at [email protected]
In Bazaar Brief this month, we take you through the investor mayhem
on Dalal Street, as SENSEX, NIFTY and other market gauges tumbled
by over a third. To asses the impact this epidemic will have on India’s
SMEs, we cover the government’s stimulus for them in Fiscal Policy. www.bazaarmag.com
youtube.com/bazaar
For our cover story we dive into the Modi’s governments readiness twitter.com/bazaar
and response to the economic blow of the coronavirus lockdown. As
instagram.com/bazaar
all manufacturing and distribution cease, what does the government
need to do to jump start the economy?
In Aviation and Productivity we cover the long term implications this
outbreak will have on how the world travels and works. The virus has
shut shop on global airlines as well as made going to work impossi- Just Scan!
ble. It seems sudden, but this is might be the new normal.
Stay home, stay safe, keep reading.

S AM I T S H AR MA

4 BAZAA₹ M AG A Z I N E
 Index
MARKETS

1 Nightmare on Dalal Street 06

FISCAL POLICY

2 Saving India’s MSMEs 07

ECO N O M Y

3 India Inc’s COVID Battle 08

AVIATION

4 Airlines Catch the Flu 10

PRODUCTIVITY

5 Working from Home :

The new normal
11

APRIL 2020 5
 MARKETS
Bazaar Brief
Coronavirus Mayhem
on Dalal Street
SAMIT SHARMA
India’s equity markets are facing anoth- anticipating a further crash, some may
er meltdown, more than a decade after be thinking about not putting more
the 2008 financial crisis roiled global money in equities and preferring to wait
markets. Such steep falls – close to 30 and watch, while others may be willing
per cent plus in the last couple of to continue their investments but with a
months can make even seasoned lot of anxiety. A courageous few inves-
investors impatient. It is normal for the tors may be willing to pull a big short,
investors to get jittery about their future be adventurous and put more money in
course of action at this stage. Some markets to buy at what many people
investors may be thinking about exiting, are saying are low prices.

Viral Fever - SENSEX, NIFTY tumble

SAMIT SHARMA

The second week of March saw the two main

Indian market gauges - National Index of Fifty
(NIFTY) and BSE’S Sensitivity Index (SENSEX)
nosedive. Panic over the global COVID-19
pandemic caused SENSEX to fall by a thitd -
from 42,000 to 29,000. NIFTY too fell by
30%, from over 11,000 to the mid 8000s. Both
the indexes recovered by a tenth after the
government announced austerity measures
which included a financial stimulus package.
The CEO of a large consumer products com-
pany said though some of his production lines
are operating – producing sanitisers, soaps –
nearly 70 per cent of the business has stopped
completely. “It’s a question of survival more
than future investment. We are shielded
because of the nature of our business, but
activities in infra- structure, construction,
transportation and entertainment sectors
have come to a halt. Supply-side issues are
affecting businesses that are still operating.
We don’t expect things to nor- malise in the
next three-six months,” he said.

6 BAZAA₹ M AG A Z I N E
 FISCAL POLICY

<<< A local
market in Old
Delhi is deserted
during the 21 day
lockdown
imposed by the
Indian govern-
ment. The
lockdown which
began on March
25th, has been
extended, in a
further blow for
already reeling
MSMEs

India’s SMEs need more than

a stimulus package
They need a survival strategy. And the second coronavirus
stimulus worth $13 billion doesn’t do enough.

SAMIT SHARMA

“We don’t have the ‘Work from home’

C OVID-19 has already set the scene for the worst option. A textile handloom business
global recession since the 1930s. The IMF has coined it running a few machines, a local salon
‘The Great Lockdown’. For India, where the World can’t be run from home.”
Bank’s growth projection for FY’2021 was at a
three-decade low of 1.5%-2.8%, the lockdown poses
an even greater challenge. force and contribute 29% of GDP. They are an import-
The 40-day lockdown has stopped most economic ant part of raw material supply or final product distri-
activity. Trading has stopped beyond essential goods. bution that most households transact with every day.
Manufacturing has stopped since there is neither Hundreds of thousands of cash-starved Indian small
demand nor transport. Services such as tourism, businesses have either deferred or cut their workers’
hospitality, entertainment, restaurants have also wages this month while trade union leaders said more
halted. These three segments make up approximately than five million workers, mainly on contract, have
35% of our GDP. What does this mean for micro small suffered wage losses.
and medium enterprises (MSMEs) in these sectors? These MSMEs have been viable businesses contribut-
MSMEs are those enterprises that offer products or ing to the government tax pool. Their struggle will
services on a smaller scale. They range in capital have serious repercussions on unemployment – a
investment from Rs 25 lakhs to 10 crore, and include recessionary spiral hard to escape. Now left to strug-
an individual local vendor to a small factory employing gle due to factors beyond their control, a well
a few hundred people. Across India, 6.2 crore such deserved support and help may give them a fair
businesses employ 12 crore people, 40 % of the work- chance to be viable and prevent an economic disaster.

APRIL 2020 7
 ECONOMY
Saving India Inc.
from the pandemic
COVID-19 might be a bigger threat to
livelihoods than to lives. Is the Indian
government doing enough to bolster the
economy? Will Modinomics save the
Indian economy from catching the flu?

SAMIT SHARMA
W hen Prime Minister Narendra Modi announced There are several indications that except in COVID-19
a total lockdown of the country to fight COVID-19, he did hotspots identified by state governments, he does not
it perhaps with one idea in his mind. The spread of the intend to extend it further. On April 15, the home minis-
virus had to be stopped first, no matter what it cost the try sent a circular to the state governments strongly
economy. A trade-off between saving lives and saving recommending the restarting of certain economic
incomes was unavoidable and lives had to come first. activities in a phased manner outside identified
COVID-19 hotspots from April 20.
What he, therefore, imposed on India was, according to
an Oxford study of 73 countries, one of the most strin- Several state governments, including Delhi, have
gent lockdowns in the world. preferred to wait till May 3, but those that have not are
starting to get their first taste of the unprecedented
Was Modi wrong in doing so? A month into the lock-
crash in demand that the lockdown has brought about.
down, that trade-off has not yielded the quick results
The first to feel it have been the farmers. The vegeta-
that he may have hoped for. There can be no doubt that
bles they are bringing to the market are
it has slowed down the spread of the virus. But it has
rotting for want of buyers.
not stopped it. The number of new cases registered
every day is still rising, and a turndown is not i n sight. At the opposite end of the scale, automo-
bile plants, like the Maruti plant at
On the other hand, the lockdown has virtually disman- Manesar in Haryana, are reluctant to
tled the economy. With shops and markets closed and restart produc-
transport, except for essentials, forbidden, demand and tion because
production have both crashed. Unemployment, which their yards are
in India really means the absence of even casual work, still full of the
has soared to 23.4% according to estimates put out by unsold cars
the Centre for Monitoring Indian Economy (CMIE) left there by
the 30% to
40% fall in
The lockdown has virtually dismantled sales over
the economy. With shops and markets the last
year. In
closed and transport, except for essen- between
tials, forbidden, demand and produc- t h e s e
e x -
tion have both crashed. tremes

8 BAZAA₹ M AG A Z I N E
 fall the 2,71,000 working factories and 71 million
trading and other non-agricultural enterprises that “The magnitude of the crisis becomes
provide components, sub-assemblies, and materials
and transport to the large enterprises at the apex of
clearer when we consider that almost a
production chain, and final goods to the public. The quarter of the country’s workforce –
lockdown has disrupted not only these supply chains about 111 million out of 461 million – is
but, by virtually forcing the employers to throw tens engaged in elementary occupations.
of millions out of work, it has also destroyed a large These include labourers, agriculture
part of the demand for their products.
and domestic workers. They are mostly
The lesson the government should have learnt is
therefore obvious: A market economy is not an auto-
daily wagers with little to no savings.”
mobile that can stop and restart at the touch of a
button. The more severe the lockdown, and the
longer it lasts, the more complete is the disruption of 3,37,000 crore into the economy. It sounds like a great
the economy and the slower the recovery will be. By deal of money, but is only 1.8% of the GDP – half of
the same token, the more the economy is protected, what Bangladesh is putting into its economy as inter-
the sooner it will bounce back when the lockdown est-free and very low-interest loans. But much of even
ends. this small sum is not likely to find its way to the
construction sector and other small and medium enter-
GLOBAL REACTIONS
prises that will need it the most.
The industrialised market economies understand this.
This is because the relief is being offered in the form of
That is why, despite facing a pandemic fifty times as
loans, not grants. Even at the best of times, taking a loan
severe as what India is facing, they have thrown their
involves taking a risk. And these are not the best of
balance sheets out of the window and are commit-
times for industry and trade.
ting sums not dreamed of even
during the Great
Modi and his advisors need to admit, therefore, they
Depression of the
need a completely different philosophy, and a radically
1930s, to keep
different approach to the economy while fighting
both demand
COVID-19. This requires giving grants not loans, creating
and production
entitlements not additional millstones for those who
capability alive
have been harmed by the lockdown.
while they fight
the virus. Preparedness in terms of policy responses is impera-
Taken togeth- tive to contain both the spread of the virus and
er, the Modi economic slowdown. An expansionary fiscal policy – a
g ove r n m e n t big push for a big problem – is a must to save lives and
intends to livelihoods. Hence, to give a ‘big push’ to the economic
infuse Rs engine, the government should aim at a fiscal stimulus
of at least 5-6% of GDP.

Sectors worst hit by COVID-19

APRIL 2020 9
 AVIATION
How COVID-19 sent
Indian airlines crashing
It will forever change airlines and the way we fly
SAMIT SHARMA

A s the country extended its aviation ban LONGTERM IMPLICATIONS

to inbound special flights, an analysis has found Higher fares, fewer routes, pre-flight health checks
how the lockdown is grounding the entire sector and less free food: The coronavirus pandemic is
that accounts for more than $70 billion to the ushering in a new era of air travel. A seismic shift is
national GDP. underway as the world’s airlines reassess their
The Indian aviation sector contributes a reported operations and how they will look emerging from
$72 billion to the national GDP. the crisis. At eerily empty airports, mask-wearing
Assuming a 25% decline in industry revenues, and social distancing already show a behavioral
the Indian aviation sector may be staring at change among the few staff and travelers left. A
around $1.5 billion-$2 billion of losses, given the long shakeup lies ahead that is set to touch almost
current lockdown parameters. every aspect of flying after limits on movement.

The immediate relief to the Indian sector could In a matter of months, the coronavirus reset the
surely come in the form of resumption of clock on a decades-long aviation boom that’s been
domestic flights if and when it happens . one of the great cultural and economic phenomena
of the postwar world. The explosion in air travel
The international sector will still be a month or shrunk the planet, created jobs and hundreds of
two away from resumption and normalisation millions of first-time fliers, and dispersed families
as much of Europe and the United States are still rich and poor over continents. Now it’s all on hold,
reeling under the COVID-19 outbreak. with airlines slashing seat capacity by more than
It is ironic that the COVID-19 pandemic first 70% since January, according to Cirium.
resulted in a steep reduction of oil prices, which
should have spurred growth of the aviation
industry, and then crippled the sector, owing
lack of demand worldwide.

At unusually quite, empty airports,

mask-wearing and social distanc-
ing already show a behavioral
change among the few staff and
travelers left. A long shakeup lies
ahead that is set to touch almost
every aspect of flying after limits on
movement unwind.

10 BAZAA₹ M AG A Z I N E
 PRODUCTIVITY
How to
succeed at
working
from home
Millions of people are now
working from home due to the
coronavirus pandemic. For
some, that may wind up
being a permanent change

SAMIT SHARMA

W e’re currently in the midst of the greatest Establish a routine — Perhaps the biggest challenge
remote work experiment in history. The COVID-19 to adapting to a new work arrangement is finding your
pandemic is forcing businesses to quickly adapt to routine. Humans find comfort in the familiar, so until
new work setups that allow for greater social distanc- you become used to working from home you’ll likely
ing. While it is not a big adjustment for remote work feel out of place.
veterans, it can be somewhat challenging for those Morning exercise—It’s important to take into account
trying this arrangement for the first time. the reduction in your own mobility while working from
Even before the current situation around COVID-19, home. Previously you may have walked to work,
remote work has been on the rise. A recent study climbed some stairs, left the office to get lunch, etc.
released prior to the coronavirus pandemic found that Compensating for this is important for your physical
and mental health.
50% of employees globally worked remotely for at
least half of the week. This has been matched by a Get dressed for work—There’s a general principle that
similarly positive trend in employee preference when just because you can do something doesn’t mean you
it comes to remote work. The same study found that should. In the context of working from home, just
when faced with similar job offers, 80% of employees because you can spend all day in your pajamas
doesn’t mean you should. In order to set the right tone
would refuse the offer that didn’t offer a flexible work
for yourself, take the time to prepare yourself for the
option.
day just as you would if you were going to the office.
All of this means that whether you’re ready or not, Breakfast and personal time—Maintaining healthy
remote work is here to stay. The logical question now eating habits is always important, but never more so
becomes how can you not only survive in this new than when working from home and practicing social
reality, but thrive. Luckily, there’s an abundance of distancing. Breakfast is also the perfect opportunity to
collective knowledge on remote work gained by early do something for yourself: catch up on the news, read
adopters. Read on to find some practical tips and tools a book, just look out the window, or anything else that
that will help you make the most of this situation. brings you joy.

APRIL 2020 11