COVID-19 Leaves behind Hype on Vaccine and Hope for Economic Revival
Five series of unlock made no exception to the persons above 60 and below 10 years. There is an old saying in Telugu that means, the above-60 needs to be taken care of like a child. Both are wont to make undue demands on the family for care and tastes in food, which could be unavailable. These above-60s invariably visit temples, churches and mosques for tranquillity and prohibiting these small mercies of God would have a debilitating psychic effect. It was, therefore, a great relief to hear that Tirumala Tirupati Devasthanam relaxed the rules and the above-60s are permitted to avail darshan when they book online, albeit after following the other rules of such darshan.
 
The Economist carried a special issue on the effects of the pandemic worldwide. It carried alarming references to reduction in the world economy growth to a negative 5%; UN prediction of 70 countries showing up 'multidimensional poverty' of 240 million-490 million; most of the newly destitute would be from South Asia (I suspect this is an exaggeration, considering India moving to a V-shaped recovery very long) and Sub-Saharan Africa; unemployment globally will hit unexpected highs; and children would go from schools to job-search to fill their bellies. 
 
It is far-fetched to see children going for jobs even after the pandemic for the reason that even adults would find it difficult to find jobs and the children are legally kept aloof from work in several nations through signing an International Labour Organisation (ILO) charter. 
 
The pandemic fatigue fuels the revival of the Indian economy. India Inc reports profitability in second quarter. India has unveiled a COVID relief program—Atma Nirbhar Bharat Abhiyan with Rs29.3 trillion, most of which is on the credit window. Manufacturing in the corporate sector in terms of new designs and new machining architecture aided by artificial intelligence and machine learning is impacting production positively, the feeder micro and small enterprises are still the worst hit. 
 
Micro and small enterprises (MSEs) are craving for recovery, but their cries are not being responded to positively by the commercial banks in India. The Reserve Bank of India's (RBI’s) directions on revival and co-lending need further calibration to suit the present times. States too have to re-engineer their architecture of rebuilding the MSEs. It is highly laudable that the Telangana initiative of the government in this direction, Telangana Industrial Health Clinic Ltd, received a big boost with a fresh grant facility in December 2020.
 
The bad news, however, is that inflation is on the rise at more than 7%, the highest during the past six quarters, and the RBI and Moody’s put the growth rate of India at a negative 8.6% and 8.9%, respectively. In India, the recovery rate is 93.9%. 
 
The Regional Comprehensive Economic Partnership among 15 ASEAN nations took off with China, Japan, South Korea, and Vietnam in the lead to counter the hegemony of US trade concentration. Work from home has put the employment concerns on high key. 
 
Further bad news is, that US, Canada, Russia, Australia, and Europe have been hit by a second wave, with a few of them declaring a lock-down again. The vaccine hopes are on the rise but we should wait for another six months for it to reach the users. There is no guarantee that such a vaccine would be able to address the long-winding effects of the new community spreads that are engulfing several parts of the world as we step into 2021.
 
I observe a large impact of the SARS-CoV-2 (COVID-19) coronavirus pandemic on central and commercial banking. The impact of the coronavirus pandemic on central banking consisted of a significant reduction in interest rates and the purchase of receivables of troubled commercial banks, i.e., easing the monetary policy and indirect participation of the central bank in the process of rolling over certain previously issued series of bonds and treasury securities. In this way, monetary and economic policy-makers used the available instruments to start the processes of activating entrepreneurship. 
 
On the other hand, the impact of the coronavirus pandemic on commercial banking consisted of accelerating the development of electronic Internet banking, including mobile banking, accelerating the digitisation of banking transactions and operations, and increasing the scale of payments made electronically. 
 
In the anti-crisis shield, many enterprises received financial support as part of State aid, received tax-breaks and / or non-returnable subsidies for maintaining business continuity and maintaining employment despite the real suspension of business activity, so the scale of contracting new economic loans dropped many times. Therefore, commercial banks, as part of new banking product offers, using electronic marketing, offered the so-called zero-cost accounts with hidden costs. 
 
Sometimes, these new, seemingly attractive, offers include an increase in fees for certain types of financial services rendered more and more remotely via the Internet. Commercial banks, in connection with a significant decrease in lending, to protect themselves against the scenario of presenting financial losses in financial statements for 2020, increased fees for specific, selected financial activities and services. 
 
Commercial bank customers more and more often consider switching to fin-techs and investing in various assets without banking offers. This is, among other things, related to very low interest rates on bank deposits, which, considering the increase in inflation and the tax on capital transactions (19%), are negative in terms of real profitability.
 
Repeated calls of customers of Internet use and phone use for repairs could not be attended due to shortage of service personnel. Demand for health and hygiene workers has hit alarming heights while the supply could hardly match both time and cost. Cyber risks are on the rise. Fraudsters are able to make merry. 
 
Advantages of the pandemic have been high level of consciousness among all citizens on health and hygiene, sanitation and healthy food. Austerity has set in. This does not mean that retail consumption has gone down. Fast moving consumer goods (FMCGs) have been showing a good sale in retail markets. This has boosted consumption and demand, particularly during the months of November and December due to festivals.
 
The pandemic has forced organisations to adopt digital technologies. They are putting in efforts to embed them into their businesses of the future. The search for global markets would accelerate. However, the reach would be hard in the context of heavy decline in global transport, storage, distribution, and servicing facilities. It is worth recalling that digitization is a service tool and not manufacturing tool. 
 
The new environment for work – work from home (WFH) or work with facilitation—has been increasing the fatigue in the homework spaces already. Recently, Satya Nadella, chief of Microsoft, is rewinding the WFH strategy. People have also learnt to live with the coronavirus. 
 
The virtue of the virus has been that it instilled a sense of respect for the police, doctors, nurses and other paramedical staff who helped conquering the fear of death. They made a living with mask, cleanliness, homely food and maintaining distance as a safe practice. The new normal is settling in both in the economy and in the homes in India, but not in the world. 
 
Vaccine production and approvals have unleashed new hope in citizens and within the next six months a new normal is likely to emerge and India will be moving to export high on vaccines and other manufacturing activity, going by the current indices of industrial production and steady inflation index. 
 
(The writer is an economist and risk management specialist. This is partly excerpted from the chapter on the topic in his two-part autobiography under print: Roots to Fruits – The Journey of a Development Banker.
 
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