Introduction

Those are the best of times! Those are the worst of times! These are the finest opening lines of a celebrated writer of 20th century. Ironically it is our time now! Just on February 27th President of USA graced our country with his visit. Motera stadium at Ahmedabad was reverberating with 100000 strong crowd with a historic welcome. He left our shores on February 29th. We could’nt have imagined that we will be under lockdown in less than a month. Scandinavian countries Singapore were already concerned about the possible outbreak by 1st week of February.

Backdrop The pandemic has not given rise to a generalized shortfall in aggregate demand. Rather, it has generated a Great Economic Mismatch, characterized by deficient demand for things requiring close physical interactions among people and deficient supply of things compatible with social distancing, where appropriate. Expansive macroeconomic policy can stimulate aggregate demand, but when social distancing is enforced, it will not stimulate production and consumption whenever this demand is satisfied through physically interactive activities. To overcome the Great Economic Mismatch, “readaptation policies” are called for. In the medium run, these policies promote a redirection of resources to activities compatible with social distancing. Decelerating Growth and Fiscal deficit The world economy was not in a great shape with some economists debating whether recession has arrived.Indian economy has already seen reduction in growth.Fiscal deficit could not be checked.

What does it mean for (a) - Individuals and  (b) - Business?

Individuals - Reduced flow, Regular expenses, Falling interest rates on hard earned savings, frozen DA(pensioners),
Middle class medley - Nor eligible /can avail subsidies
Safety Concerns – Failed/failing banks, Closed Mutual Funds-Franklin Templeton,
IlliquidAssets - Gold & real estate
Business - locked down operations, Asset maintenance cost, Locked up cash in debtors Stocks & stores,
Keeping the work force, mounting interest & finance charges uncertainty to plan ahead, supply chain & logistics.

Turnaround Challenges

Individual - Review the investments criteria- safety stability regularity of cash flow
Cautionary Action: Not to fall for couple of %ges of higher interst at the cost of criteria stated above.
Living within means. Lockdown an opportunity to reduce and save on outdoor Expenses and entertainment.
Enhanced social distancing and building up immunity.
Business: Build up trust and confidence with Employees customers suppliers stake holders and key enablers through free and frank discussion with a mind set of give and take.
Avail the special facility provided by special fiscal measures providing adequate time to service in affordable installments.
Monetize wherever possible to augment the cash flow.
Caution:  Avoid high cost moratorium of existing facilities by renegotiating the Existing facility under the special guidelines.

Way Forward

Lockdown uncertainty is still to be cleared. During this period planning for post lock down scenario is premature. However we can prepare ourselves for various stages of post lock down as and when it takes place.

Individual - Increase the investments with regularity of returns. Reduce the high risk MFS and Equities.
Keep the balanced MFS with good rating. Invest partly in super safe investments like RBI Bonds.
Do not avail high cost moratoriums like EMIs Credit Card payments.
Keep your health insurance active.
For urgent requirement use the high value gold to avail finance.
Review your real estate portfolio.
Constantly Pl. keep in touch with your bankers/financial Advisors.
Business Forge a mutually perfect understanding and be in constant touch with your employees, customers, suppliers bankers, logistics providers and other enablers to stand by each other and see through the difficult times.

It is expected that fiscal assistance in the form of concessional funding with affordable service terms should be available for employee expenses and minimum threshold operational needs.

Any ongoing capacity expansions should be put on hold.

Dealing with dignity empathy and concern is the only way to build mutually sustainable strategy to survive, stabilize and spreadout.

Expansionary Concern

It is to the credit of Central and state Governments they have risen to the occasion to reduce the pain of lockdown with phenomenal effort subsidies and other helpful measures. Economy has to be expansionary at the time of crisis like this. Fiscal deficit is bound to loom large.

One is reminded of the prophetic words of Nani Palkhiwala in one of his celebrated post budget analysis “ the Government has to be poor! People have to be Rich!”.

At times like this the Government can be poor- will force to abandon extravagant projects and foreign jaunts!

People should be prevented from poverty! So that they can sustain to stay alive and live within their means!

You can make a guess which industry will stay survive, And the ones which will not!.