Just Do It!

Every news channel and e-paper in India and abroad has only one news – Covid-19, and naturally so.  Viewers eagerly look forward to hearing about its abatement, development of a new vaccine, relaxation of lock down, but, are alarmed instead, by the steady increase and spread of the disease across the globe.  

Every morning and before retiring to bed, for most of us, this has become almost a routine and end of the day it is invariably, OMG – the numbers are not stabilising and how can people, of course others, be so stupid.  During the day, there is both hope and despair. People hold onto any good news like straws in the wind, be it whether the virus is affected by high temperatures expected across India, and for the first time, you have people looking forward to the heat of our summers.  The despair takes over when an element of doubt is sown in by somebody who has studied biochemistry 30 years back caveating that the virus could also mutate in the meantime and may not be like the other viruses. Then somebody broke the news that since most of us in India have had a BCG vaccination, the antibodies may have made us immune, till you are told, again leading to despair, that BCG vaccination had been discontinued in India four decades back.  Similar good news about people from the eastern part of the country being spared because of their having gone through multiple bouts of malaria with large doses of quinine has made the sales of tonic water go up. You hear about the development of a vaccine in Israel, some tests being done by Sanofi in France, Mount Sinai in New York, other hospitals conducting plasma antibody trials, which generates an expectancy of early victory but then you are told that it may take 12 to 18 months for this to be commercialised.  Hope turns to despair several times a day and vice versa.

No one knows when will this all end.  Any uncertainty naturally breeds fear of the worst.  While everybody is comforted that 95 % of those afflicted will not be required to be hospitalised and  individually everyone thinks himself/herself to be fit enough to be falling in this 95% category, there is always a lurking fear of what if.

So it all boils down to hope and belief – we shall overcome eventually.  This eventuality is presently swinging between 3 months to 18 months as per reports of most Pundits.  If you are not aware of the time period for which you need to plan you try and conserve to the maximum to outsurvive others, and this thought is quite pervasive actually so self preservation becomes paramount be it individuals, territories, countries or entire geographies.   It applies equally to businesses – small, medium and large.

What is clear is that the time and cost for fighting this war is quite indeterminate therefore precision is really not possible as there would be imperfections, and waiting for analysis beyond a defined period may aggravate the situation from bad to worse.  Hence, the title of this piece ”JUST DO IT”.

There are a few facts which are undeniably accepted, the degree of severity could be judgemental and subject to more time taking and deeper analysis. These are:

1. Businesses have been closed. 
2. Labour have migrated. 
3. Supplies have been disrupted.
4. Delivery services have been severely impacted 
5. Receivables are not being collected.
6. cash flows have been seriously impacted. 
7. This is across individual, agriculture, trade, and manufacturing.
8. Liabilities are not being met, even essential expenses like salary, wages, rent, electricity, taxes etc, are being delayed or tried to be curtailed.
9. Everyone expects the government to help out in some way.

The laundry list varies and is endless, though everyone realises that the authorities can do only so much and not beyond. There will be general admiration for the steps taken by the government in announcing and enforcing the lockdown, there will also be disappointments for not meeting expectations completely, overall, there will be goodwill for the authorities if they take expeditious action.

The key thing here is greater expediency.  While most nations have already announced economic packages and are improving on these incrementally as the situation unfolds, unfortunately, we have only announced the creation of an economic task force. 

In this situation, a few things will need to be done immediately. Remember perfect is the enemy of the best and at this  juncture we could do with good but immediate steps. Some of these could be:

1. Extension of liabilities, and since we do not know the period the lockdown will exist, it is best to be conservative and take a 6-9 month timeframe, to be reviewed as we go along.
2. DBT  of Rs 1000 per month for the period of lockdown plus one month for all  bank accounts which have a monthly credit not exceeding Rs 15000 per month.  This would cover all JAM accounts. All construction companies and contractors to be defrayed the monthly wages paid to their labourers existing on their rolls as of March 1st, by the government.
3. For all other businesses which file for min taxes or pay GST upto a specified amount determined from the backend, immediate availability of 10 to 15% of their sanctioned limits as of March 1st, as a directive to the banks and not left to their discretion.
4. For all other Businesses since they are not releasing their cash flows, the adhoc limits should be made available for them to restart business only 15 days post lifting of lockdown, meantime, they will survive on their existing cash to meet their minimum expenses  and in any case if cash is provided to them they will not use it but conserve.
5. These limits should be made available from the backend only on the  basis of an electronic application and Personal guarantee of the promoters.  Don’t expect banks to take individual credit calls, in the interest of time.
6. Allow for a  one time restructuring of the accounts for the deferred interest and installments of 6 to 9 months to be payable only between the 36th month to the 60th month as cash flows are not going to be normal for at least the next 12 to 18 months assuming complete lifting of lockdown in the next 6 months and the discovery of the vaccine.
7. This should be done immediately across the board and as a directive from the regulators without impacting the rating and asset classification –  If need be, banks should be asked to make progressive provisioning for the credit costs which may go up.
8. NBFCs and MFIs have the reach and are the only ones who are actually giving micro and small loans – on lending by banks through them would help restart the economy faster.  Since these also have liability issues as they will not receive funds from their customers, hence, to prevent another systemic failure across all NBFCs and MFIs, provide them with liquidity to cover next 12 months maturing liabilities and give them fresh funds post lockdown for co lending and securitisation.
9. For agriculture, while FCI would be procuring directly; given their inefficiencies, farmers may not get payments immediately, so encourage banks to finance Arthias but use digital payments to track procurement of Rabi crops and storage –  subsequently 25% of the same stocks can be used for PDS.
10. Sector specific reliefs should also be worked out with industry for airline, tourism, hospitality, healthcare, transportation, etc.
11. Announce phase wise withdrawal of lockdown – identify the activities in each phase, date of withdrawal could be announced separately as the situation evolves.   Would help in a better planning of revival by all concerned.
12. JUST DO IT.

After writing this piece, I am certainly feeling quite hopeful.  We shall overcome.

Jai Hind!