Chennai: Hereafter people will be referring to time as “Before Corona” and “After Corona”, because the way of living may change drastically, especially in ways of spending.
The lull is said to be the most deeper among the recessions the nation has ever experienced. Statistics say that India’s growth is estimated to shrink from an earlier estimate of 0.4 per cent to -3.6 per cent.
The nation’s GDP is expected to fall by five per cent for the year 2020-21. So how will this affect business and the way in which people spend? Is the cash crunch real or artificially created?
News Today looks at a few industries to understand the way how things have changed. S Kumararaja, a builder in the city, says he had turned down a new project a few days ago. With the exodus of migrant labourers from the city. he says the real estate is badly affected by the shutdown.
He says that clients of a newly completed apartment complex have cancelled the booking as they are unable to pay the EMI to the banks and are asking for reimbursements.
It would take two years for the industry to stabilise, he says, “The prices of building materials like cement, steel and sand have increased. People may not be interested in buying apartments on the city outskirts like before. Manpower is yet another problem. I sent labourers to Kolkatta and Odisha. I spoke to 27 of them and only four said they would return.”
Kumararaja says he is leaving the business and is contemplating farming in his plot on ECR. Experts say that agriculture, pharma companies and hospitals are the three sectors which are going to make profit. There is already an increased demand for herbal medicines in the market.
Travel and tourism will experience a low too. Hotel industries, tour operators, resorts had to deal with cancellations in the last two months.
Even as it is said that the hospitals and health sectors will be gaining, Dr Ravindranath of Doctors Association for Social Equality says that it is the corporate hospitals, pharmaceutical companies and businesses involved in making medical devices which will make profit.
Even during the lockdown, the small clinics, laboratories, and nursing homes were unable to run due to lack of manpower.
They did not have sufficient PPE kits and using them would escalate the fees. Hospitals cannot keep imposing the charges for PPE kits on patients, he explained.
The field of marketing, advertising and public relations (PR) is facing unprecedented times. An independent PR professional said, “There are no big events happening and clients are not advertising. Those who are working in PR firms have taken a pay cut and many co-working spaces have closed. They have been asked to work from home even after the lockdown is lifted. Some have lost jobs and the future of PR looks bleak. Clients are talking about pay cuts and are interested in webinars in future instead of going for a conference.”
PR professionals understand that they will not be able to host events in the near future due to social distancing norms which are here to stay for few more months. They expect a year’s time for the business to pick up and are waiting for brands to re-start business.
Subashini Ganapathy of Subashini and Associates has a different perspective to offer. “Nature of spending will be seen in two ways. One section who are tuned to this way of living will continue this way. And nothing will change in the ways of those who are addicted to spending,” she says.
Multinational companies have sufficient accumulated reserves and can survive without profits for at least two years with just overhead costs. But there are entities who do not want to spend the reserves and exhaust them and stand with empty hands, creating a situation that no one has money: an artificial crunch.
The real sufferers, she said are the small and medium-sized enterprises who had lean profits. Even malls and theatres will not run out of business as 60 per cent of those who visit these places are children and teens, who will still continue going out.
The major challenges for businesses however are going to be the stock lying untouched for months and manpower.