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COVID 19 Economic Impact Study By Levers For Change A Report From Ground Zero Understand The Impact Of Corona Virus On Indian States Industries And Stakeholders

COVID 19 Economic Impact Study By Levers For Change A Report From Ground Zero  Understand The Impact Of Corona Virus On Indian States Industries And Stakeholders

COVID-19 has changed the way the ‘normal’ world functions. It has rattled the fundamentals and we are all trying to cope with the ‘new normal’ – a term that is amongst the most trending today!

Industries, across sectors and states in India and globally, have been greatly affected. Some bearing the brunt directly, while others facing the challenges indirectly, thanks to supply chain disruptions. While some businesses are sailing the tailwinds, most are grappling with the effects of this global pandemic. Consumer and business dynamics have literally changed overnight. This has forced us, as people and as organisations, to re-evaluate our preparedness to fight the disease and secure the future, for ourselves and our stakeholders.

As an industry or organisation or business, navigating this COVID-19 pandemic and its aftermath is a huge challenge, no doubt. It needs a methodology – a clear approach – to see through all the chaos, bring in a method to the madness, so to speak. It is crucial to clearly understand the economic landscape at a macro level, before and during this pandemic, to help extrapolate what could perhaps be the ‘after’ state of affairs at a micro-level.

It is with this thought process that Levers For Change (LFC), a decade-old Business Transformation Consultancy based in Indore, Madhya Pradesh, embarked on a detailed study, in an earnest attempt to understand, and thereon share insights on, this truly unprecedented pandemic and its impact on the Indian economy.

The team led by Mr.Ankur Kumar (Operating Partner), reached out to all the stakeholders they had ever come in contact with over their decade-long journey. They connected with hundreds of stakeholders: CEO’s, small business owners, farmers, large distributors, retailers, truck owners and salaried employees across states. They were able to cut across all strata leveraging their network, that covers almost 65% of India’s tehsils. All this, with the keen intent to provide constructive insights, to help businesses and stakeholders form a clear view of the economic situation.

Why did LFC feel a need to do this? What was the purpose of this study?

“COVID-19 has presented an unprecedented level of uncertainty in the business environment, and as consultants, the one question that our clients frequently ask – ‘when will the situation become normal?’ To answer this question, we looked at several data models that predict the opening of lockdown and recovery of the economy; however all these models varied significantly.”, explains Mr.Omprakash.

“Moreover, given the diversity of India, there are so many layers of complexity, for instance, certain states host high economic activities while there are others that are rather low on this scale; while, some states are connected to the international markets, some are fairly insulated from the global dynamics. This apart we have the quintessential urban-rural divide. None of the existing data models, in a nutshell, comprehensively addressed these complexities & dynamics that are peculiar to our country,  in many ways.”

“Given this diversity, exposure or lack of it and the divide across the states, it is difficult to make predictions that will hold ground country-wide or sector-wide. For example, Coimbatore, Tirupur, Karur in Tamilnadu and Surat, Vadodara in Gujarat,  are two prominent textile belts, but the severity of infection is different in each of these states. The value chain and recovery of the Textile sector are thus difficult to predict accurately.”

Businesses need to understand the country-wide recovery by actually looking at the markets and geographies at the ground level – local level.  We need to understand that even within a state, there are different economic centres, and each of it is exposed to varying degrees of impact.

“It thus becomes very important for leaders to have a holistic understanding. It is for this reason, to fill this gap, that we decided to undertake such an extensive study, at the local level – at ground zero.”, says Mr.Ankur Kumar

“This report intends to help understand which sectors/ areas, over a period of time, are likely to open up faster, and which may take longer. This will enable leaders to plan their business activities accordingly. A fine example of this – a client of ours, who wished to do a sales transformation project in a particular part of the country, is now looking at repositioning the market to address.”

Over the past decade, LFC has planned and implemented several sales transformation programs, spanning various sectors – Agriculture input, Construction, FMCG and several other industries. This helped build strategic touch-points across districts.

Mr.Ankur Kumar explains, “For the study, we identified the top 10 states in India that contribute to 75% of the GDP. In these states, we further identified districts that contribute to 80% of the state GDP. We tracked and reached out to our deep network in all these districts. We took their feedback – their view on the COVID-19 impact on Agricultural, Construction, Trade, Local Manufacturing, Local Transportation and other business activities – at their ground zero.”

“We combined their feedback with the metric of Healthcare System Readiness, which we understood from the Govt. websites – number of tests per million and medical infrastructure available to deal with the pandemic. We also read through the various reports published on COVID-19 and took wisdom from them. In this way, we created this report bottoms-up, from ground zero. It strives to help business leaders to find the right direction, to help pivot as needed.”

The report deep-dives and presents the ‘before-state’, ‘current-state’ and the actions taken by the Govt. that will impact the ‘future-state’. It explores the situation state-wise and sector-wise for insights.

A glimpse into the report

The largest, and most impacted state of Maharashtra from the economy point of view:

Maharashtra is the largest state of India, contributing to almost 14% of national GDP. It also accounts for 36% COVID-19 cases in India.

The top 3 districts have come to a total halt. COVID impact on the districts of Pune and Thane has hampered the manufacturing of the estate; Trade and Services based economy of Mumbai is also disrupted due to social distancing; Agriculture as a whole has taken a beating with farmers struggling with inefficient logistics, harvest being sold way below MSP and coping with a labour shortage.

Services contribute to 54% of GSDP, manufacturing is the second major contributor accounting for 27% of GSDP and agriculture contributing to 18% of GSDP. None of these sectors, except Agriculture, has seen any significant intervention from the Government to expedite the recovery process.

The number of cases in Maharashtra is expected to peak in the month of July and from there it should take further 2 months to emerge completely out of lockdown. However, the demand recovery and recovery of the economy as such should be expected only in the second quarter of FY22.

The report details the top 10 states in this manner. As such, with this study, LFC summarises that Indian towns will be fully back to normal by the end of Q3-FY21 and the Indian economy will revive by Q2-FY22.

Mr.Sunil Chordia – CMD, Rajratan Global Wire (Asia’s second-largest bead wire manufacturing company, with factories in India and Thailand), also a Member of CII, Western Region, too concurs with the findings and shared his views on the topic.

 

“The war against Corona is proving to be very costly. In spite of which part of the globe you live in or whatever type of interventions the government makes – the economic cost seems to be very high. In India particularly the economic cost of lockdown surely seems to be underestimated. While we might seem to be doing better in terms of infections, there is no real clarity on how the resumption of supply chains back to normal levels – will happen.”

“With already a highly broken & fragmented supply chain – opening up of lockdown being handled by different state governments differently, any model that predicts economic recovery shall be only partly true. In that sense, I find this study of LFC, reasonably fair – given their model looks at local economic centres and their recovery patterns. I tend to agree with their findings of the economy coming back to pre-COVID levels, surely not before Q2 of FY22”

Get access to the complete report…

The executive summary and the complete report is available for free download on the LFC website.

https://leversforchange.in/covid-19-economic-impact-study-by-levers-for-change/

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