For an economy driven by compassion

The fear of the Covid-19 pandemic has revealed the fragility, as well as the scale, of the bottom of India’s economic pyramid. Ninety per cent of Indian workers are engaged in precarious employment, as contract workers, part-time workers, casual labourers, domestic workers, etc. They have no security of incomes. The lockdown imposed to prevent the spread of the contagion has disrupted supply chains. It has also shut off the incomes of hundreds of millions of Indian citizens. Many are in a precarious position. Even when essential needs become available in their communities with a partial opening of the lockdown, they will not have the money to pay for what they need.

It is essential that supply chains be opened up soon to deliver essentials to communities. It is also very important that channels be opened up to put money into the hands of, or into the bank accounts of people. The time has come for a ‘direct cash transfer’ on a large scale. Many economists have advocated this as the best way to provide benefits to the bottom of the pyramid, rather than through leaky government-managed supply chains for subsidised food etc. Fortunately, India has been able to create money transfer systems to the bottom with the use of digital technology, by the opening of Jan Dhan bank accounts, digital payments platforms, etc. This is the time to use them.

The big question is, where will the money come from, to flow to the people down these channels?

Business responsibility

The Prime Minister has pleaded with all those who have ‘employed’ people, with or without formal contractual engagements, to discharge their ethical responsibility towards these vulnerable human beings and their families. Pay them even if they cannot come to work, he has urged. Send them money now when they need it most.

Several companies are committing to pay their regular employees as long as they can. It is heartening to note that some companies are going further and volunteering to pay even their contract workers, though they are not legally obliged to. It is even more heartening to hear that some ‘platform’ companies in the so-called ‘gig-economy’ may be going one step ahead to identify the workers who have been stakeholders in their enterprise, doing work irregularly as was needed. They are reaching out to them to transfer cash and provide relief.

Charity begins at home. All workers in an enterprise are part of its family. This is not the time to be legal. This is the time to be humane.

Corporations will be torn between the call to donate money to government relief funds and meeting the needs of their own stakeholders. They should note that the less they take care of their own extended family of workers, the larger will be the requirement of taxes and funds for public relief.

Regaining trust

Corporations have been losing the trust of citizens all around the world for many years, as the Edelman Trust Barometer has been revealing. People say that corporate boards and CEOs care only for investors, and not for people. Even philanthropy with profits earned from businesses is losing its power to build trust. People ask, ‘how did you make the money,” not “what did you do with it after you had made it? Were you looking after all those who enabled your enterprise to function while you were making profits and accumulating them in your trusts and foundations, and making charitable donations?”

This is the time for corporate leaders to remember all those who have laboured for their enterprises, many out of sight — send them succour immediately. Use direct transfer channels. Also, ask them how they are living. Start planning new forms of contracts with those who will come back to work when the emergency is over. Do now as you mean to carry on.

Covid-19 is a storm with unprecedented fury. We pray it will pass soon. It is tearing down economies everywhere. We are realising that the economy will not return to the old normal. When the storm has passed, what will be the shape of the new economy we will build? Will it be a new house that is more resilient against global storms: financial crises, pandemics, and even the impacts of climate change which we cannot ignore anymore? It should be a new house that will have a decent place for everyone.

Rebuild economic systems

Global economic systems are going through a ‘bifurcation’ caused by the global Covid-19 pandemic. A ‘bifurcation’, in systems theory, is a point at which the shape of a system is transformed. What emerges on the other side of the bifurcation are the same constituents of the system, but configured very differently. The crisis has provided humanity an opportunity to rebuild economic institutions in new forms. To change the paradigm of economic policies, from top-down growth to bottom-up, inclusive growth. To repurpose business institutions to mind societal needs more deliberately in the ways they function, not merely through CSR and philanthropy.

This is the time for many business thought leaders to step out boldly. To show that the business of business will not be only business henceforth. To take care of the needs of their extended family of workers, going beyond what the laws, that they had fought hard to change in their favour, require them to do. Laws that permit them flexibility with employment. Laws that make it harder for workers to organise to have their voices heard. Leaders will use broader score-cards of corporate performance, accounting to all stakeholders, not only to their shareholders, even if the laws do not require them to.

Governments must be bold too. Many corporations will need assistance from public funds to survive through the crisis. Their bailouts must be accompanied with new responsibilities to meet public needs. Ease of doing business must, henceforth, never be at the expense of the ease of living of citizens, especially the least fortunate.

Through The Billion Press. The writer is former Chairman, BCG India and the author of ‘Transforming Systems: Why the World needs a New Ethical Toolkit’