Tuesday, June 29, 2021

India after Covid - Nine areas where we see major changes

Currently, in India, we are seeing the weakening of COVID's second wave. 'Weakened' doesn't mean wiped out; hence, there is a possibility that delta and its variants - probable future series like lamda, zeta, eta, etc may hit us with more power. I assume that one day, current or future vaccines finally will be able to bring the disease under control. 

In this article, I would like to discuss major changes that may happen in India and that is directly linked to Covid. 

1. Perception of Government
Clearly, neither central nor state governments were able to predict or do advance planning for the second wave. This clearly made a hole in the invincibility and infallibility perceptions of the current central government across the population. There was a time when all actions by the central government - regardless of its own merit - were considered to be the right thing to do. This is going to change; a lot of those changes are already there. Note that, this might not affect the winnability of central government. 

2. Poverty
Over the last three decades, India pulled millions out of poverty. A lot of that effort was undone by this single disease. As per the numbers from Azim Premji University, during last year's local down approximately 230 million(2.3 crores) Indians were pushed back to poverty (numbers are based on national minimum wage around 45$/month). Earning of organized labor sector also reduced - many lost jobs and many others suffered a direct or indirect reduction in salary. At the same time, the price of a lot of items, including but not limited to petroleum products were increased. This will definitely take a hit on family savings and their budget. Many families will be forced to cut back their expenses; this will have a domino effect on consumer markets.

3. Medical Expenditure
India's government spends around 1.2% of its GDP on health care. Even in normal times, Indians pay 60% of their health care cost from their savings or by borrowing. Covid generated huge medical bills. The absence of government services in many places left the people at the mercy of private hospitals. Many of whom charged exorbitantly. Economist says, even in normal years 1 in every 20 families are pushed into poverty due to medical expenses. Just imagine the situation in a year ravaged by COVID. Emergency and long-term medical expenditure will push a lot of families to poverty. 

Will this bring a change in the way Indians pay for healthcare? Probably yes. I think this is the right time for governments (central and state) and the insurance sector to pitch in and cover the masses. 

4. Biological water and public health 
India is not known for the eco-friendly processing of medical/biological waste. More than one and half years of Covid created a lot of medical waste; all of these are not getting processed properly. If not addressed early this is going to create a new set of problems. 

We all saw the pictures of numerous bodies floating in Ganga. We also see the government personals re-cremating the bodies which were in shallow graves in the riverbed. If not addressed early this is going to create problems for people who are living downstream and depend on river water. 

5. Business
Needless to say, all businesses are affected by Covid one way or another. Take the example of the tourism and hospitality industry. Globally the number of tourists and business travelers reduced considerably. This affects the business of hospitality, airlines, tour operators, hotels, etc. Similarly, people are cutting back on all non-essential expenditures. This affects a lot of small and medium-scale industries as well. It will take some time to recover. 

In some areas, things may have changed permanently. For e.g. teleconferencing, video conferencing, and other real-time communication softwares are here to stay. This means growth in business-related travels will not be as per earlier projections. Work from home (WFH) culture might increase even if everything is back to normal. This means people don't have to pay rent inexpensive cities, instead of that they can sit wherever they are comfortable and work from there. 

The closure of theaters moved a lot of movie releases to OTT platforms like Amazon Prime, Netflix etc. This will essentially change the way we are watching movies.

Similarly, more government services will be moved to the web and apps. This will definitely cut down the work of a lot of middlemen and consultancies. There are many more categories like that. All of them need to reinvent themselves to survive. 

6. State finances
One of the biggest threats to independent decision-making of states and federalism is the dire state of state government's finances. Most of the state's financial situation is an economic basket case. They were not able to generate enough revenue from the activities at the state level and depends on the central government's transfer of funds to states. Even if these funds are the right of states, the central government collects and then distributes them. The ability to print, collect money, and set rules gives the central government disproportionate power in the Indian federal system. Unless the states are not able to generate income on their own and improve their finances; even the most forward-looking and prosperous states will not able to implement their policies. Simply taxing more on liquor and petroleum products is not going to make this change. 

COVID was probably one of the toughest nails on the coffin called state treasury. Since health care is a state subject, each state has to spend a lot from its pocket. At the same time, tax growth is not as per the expectations.

7. Antibiotic Resistance
As per multiple reports, in exasperation or otherwise, a lot of antibiotics and other medicines which are used as a last resort were used like normal paracetamol tablets during the pandemic times. How it is going to affect antibiotic resistance on large scale is yet to see. There will be some damages. 

8. Nature
Among a lot of bad things, there is some good news as well. For decades, the ever-growing intervention of human beings in nature and its cycles created catastrophic damages. COVID put a break on a lot of those activities, where the conventional bans had no effect. We still fire up the coal plants and pump a lot of greenhouse gases; but, reduced human footprints on the source of rivers and forests are showing some kind of revival in the health of aquifers and other water bodies.

9. Social media
Pandemic brought back a lot of families together. People who see old friends and relatives only via video calls and hear via mobile phones can see them sitting on the next chair. One side effect is, many spend more of their hours on social media, which beyond a point may not be healthy. 

Wish that COVID go away as fast as they spread across the world and once again we can roam freely across the globe without wearing masks.