Corona - 2 What lies ahead?

The stock market mayhem is continuing unabated. Investors have lost nearly 30 Lakh crore in the last one month. Companies have shifted to work from home model. Businesses have shut down their activities. So a prime question is what lies ahead? The following are the 10 things one can expect in the next eight to twelve month timeframe.

1. Specifically speaking of a country like India, nearly 90% of the workers are in the unorganized sector where no social security is offered. They live in hand to mouth situation. With businesses closing down, these daily wagers and un-skilled workers will find it very tough to survive. Therefore, General Basic Income (GBI) kind of scheme must be on cards where money could be directly deposited to their accounts. 

2. The economic response task force under the chairmanship of the finance minister will take a host of industry-specific measures. It is likely to provide stimulus packages to most affected sectors like Aviation, Tourism, etc. 

3. There will be a definite fiscal slippage of almost 200-300 basis points. Moreover, the interest rates will be lowered in order to provide easy money.

4. There could be a Covid Tax on the general public and corporates for the next 2-3 years come. All the CSR funds, religious and social organizations, NGOs, etc could be put under the Tax net in these times.

5. Every crisis offers an opportunity to break from the past and usher a new future. The Covid crisis will also be the same. It will be an opportunity to reform the taxation structure of the country. All the exemptions on social religious organizations will be taken away. All the exemptions and deductions for the general public could also be taken away.

6. The country will move vigorously towards a cashless economy. More and more transactions will happen online and in card mode.

7. "Work from Home" model will become a norm for IT companies. It will bring down the cost of office space in major cities.

8. There could be a financial emergency at the later stage of the crisis. The salary of government employees will be reduced to half. Many other similar cost-cutting measures will be taken by the central and state government.

9. A population bust will happen 9 months down the line. Husband-Wife with free time locked up in one apartment for 15 days are likely to procreate. 

10. In an extreme scenario, the country may turn beggar. Banks might collapse due to rising NPA.  Stock market losses, Banking failure, high fiscal deficit, civil war-like situation because of high joblessness and heavy external debt could result in a major crisis for the country. The one positive amid all the uncertainty would be political stability, and resolve of the nation.

However, all is not dark. There is a best-case scenario as well where all the above listed 10 phenomena will happen albeit at a reduced scale and with much less intensity. In any case, the timing of Corona could not have been worse. It is akin to a rub of salt on economic wounds from which India is suffering at present.