Stocks

It is time to reset priorities

| Updated on March 20, 2020 Published on March 20, 2020

Working from home gives plenty of time for introspection and thought; perhaps this is what God intended giving us Covid-19. It is not business as usual but is a time to rethink our priorities, not only as individuals, but also as policy makers.

In India, Covid-19 is still in Phase-2, with some citizens being infected by travellers. In fact, India has so far managed to take measures to contain, fabulously! But God forbid, if this spreads to community level, or Phase-3, we will be in big trouble, for that is when there is an exponential growth in contamination. Our medical facilities will be unable to contain it.

In Mumbai the only designated hospital is Government run Kasturba and its doctors and staff are working beyond their call of duty to treat patients. The problem is a piquant one, and a challenge for policy makers. On the one side, there is need to test patients in an effort to contain spread. On the other, the cost, at an estimated ₹10,000 per test (so far borne by the Government), would be impossible to bear, if applied to 130 crore people. So the Government has restricted testing to those most at risk.

So here is one re-set of priorities. India spends 2 per cent of its GDP on defence and 1.28 per cent on health. The levels of hygiene at Kasturba, the fulcrum of Covid-19 treatment, are very poor and the brave efforts of its staff ought not to be nullified by scarcity of resources to maintain a good level of hygiene.

Even more so when we see the callous way in which the Maharashtra Government is squandering its resources. Last week Ajit Pawar, Deputy CM, sanctioned an interest free loan of ₹30 lakh to MLAs to buy a luxury car.

Priority reset — spend money on necessities such as healthcare, to fight a global threat, than on luxuries for a handful of people.

The Government will need huge resources; with a lot of businesses impacted adversely, GDP growth will be hit and the Government will need to step in. Moody’s has lowered its forecast of India’s real GDP growth to 5.4 per cent this year, but one feels this would be even lower. Agriculture growth will be low; exports of produce has fallen due to restrictions in the importing countries. Services have been hit by the closure of cinemas, eateries, IPL and other events, conferences etc. Manufacture has been hit and capex growth will be very low.

In such a situation Governments are stepping in. In America, Trump is thinking of sending money directly to consumers, to help cushion the impact of Covid-19. The US also plans to allow tax payers a deferment, without interest or penalty, of their tax returns.

In contrast, the behaviour in India is different, treating the situation as ‘business as usual’.

For example, in the case of the acquisition, under Bankruptcy Law, of defaulting firm Bhushan Steel (BSPL) by JSW Steel, for ₹19,700 crore, the whole process the whole process was derailed by the Enforcement Directorate maintaining it had first claim on BSPL assets and, shockingly, that JSW would be held responsible for acts of the previous management. As a result, JSW has not paid the ₹19,700 crore, which would have gone to the lenders and helped alleviate stress.

Similarly, the Supreme Court has threatened, bizarrely, to jail executives of telcos for not paying AGR (adjusted gross revenue) dues to Government. The basis of calculation of AGR dues is disputed and the Government is willing to look at the telco contentions in order to avoid a closure of large players.

Priority reset — we must all look at the big picture and see what is good for the economy and for our future. It is not business as usual.

A Japanese company, Fujifilm, has apparently discovered a drug, successfully tested in China, for Covid-19. If India escapes a community spread, we can hope and pray for an end to this in a month or two. But the economic impact will continue longer, and the Centre will have to think of ways in which it can help people and not to stick to its bureaucratic pettiness of squeezing every last drop of revenue in taxes and levies. That, too, is a necessary priority reset.

The writer is India Head — Finance, Asia/Haymarket. The views are personal.

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Published on March 20, 2020
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