The Indian economy has been badly hit the Covid-19 pandemic. As the country unlocks the economy in gradual phases, it is extremely important to take immediate action for speedy revival. A latest PWC report says that in order to achieve optimum economic growth and revival, all factions of the society – government, commercial enterprises and general citizens of the nation must work together with a common agenda.
Exogenous shocks like Covid-19 are expected to usher dramatic shifts in consumer psychology transforming demand patterns. The lockdown has muted demand and the pandemic impact is likely to drive shifts in supply chains and operating models. More effective and efficient utilization of national resources is a prime requisite to power revival and for that creation of an enabling ecosystem of supportive institutions is needed. Hence, it is imperative to focus on the below four pillars of growth
Reviving and boosting demand
India’s domestic market consumption contributes to about 60% of India’s GDP (FY20). Post Covid, consumer demand suffered a sharp decline. According to a PWC consumer survey conducted in June 2020, 50% respondents said they were planning to curb expenses on essentials, over 75% were planning to reduce spending on non-essential items and 85% planned to defer buying high-priced non-essential products by up to 18 months.
To revive and boost demand it is important to engage all sections of the society and to do that companies must understand the current consumer mindset and psychology and identify the new drivers of demand. Developing products and services fully aligned to consumer needs will stimulate demand. Special attention must be given to serv India’s middle class by catering to their needs through targeted interventions like enhanced access to credit along with other incentives from the government.
Since the pandemic has compelled a large section of the consumers to shift to digital channels of shopping, enterprises must shift towards digital front ends in order to access demand substantially and drive medium-term growth and revival. Few other broad level changes to deepen demand include:
- Stimulus targeted at the general masses, farmers and MSMEs
- Facilitating natural decentralization of demand
- Establishing infrastructure that supports smaller districts to boost demand
Resilient, connected and deepened supply
The disruptions caused by the pandemic brings an opportunity to accelerate transformations in the operating models to imbibe resiliency in processes, increase flexibility and become more cost-efficient. Shifts in operating model is expected to be focused around the following themes:
- The service industry will continue with the remote working model and take necessary steps would be needed to make it effective in the long run.
- Speedy acceleration of digital technology will change several aspects of operations for the better.
- Enterprises will experience an increasing inclination towards the gig economy and employment models are likely to shift to role-based (from value chain based).
Rearrangement of supply chains globally is inevitable after the crisis pointed out several shortcomings in the prevalent system. Structural changes in global and local supply chains to make it more pervasive and resilient is also expected. Reconfiguration of supply chains to accelerate growth is expected to occur around the following themes:
- Self-reliant mindset will facilitate building of local supply chains
- Emergence of new service delivery models
- Increased shift towards digitally connected and autonomous supply chains
Effective and efficient utilization of resources
India’s reserve of natural resources is huge and has not been fully utilized. Government has already announced several structural reforms in the mining sector as a part of the Aatmanirbhar Bharat stimulus. However, other resources like human resource, data resource and financial resource must also be utilized more effectively. Key themes in this premise include:
- Mobilization and better management of assets for generating capital
- Industry consolidation and cross-fertilization of resources through mergers and acquisitions
- Channelizing India’s propensity to save to spur investment
- Increasing collaboration to enable harnessing the power of data
- Boost e-learning for scalable and democratized human resource capability building
- Focus on generating jobs outside urban hubs and metros
India needs to strengthen its institutional pillars and introduce fundamental reforms that can unlock the true potential the country’s land, labor and capital. New policies that will boost ease of doing business is also an important requirement. Further, the government needs to enable participation and consultation by all segments of the society and work towards building trust among the citizens, enterprises and the authorities. Finally, India needs to increase its focus on business sustainability by moving rapidly towards renewable energy and making sustainability a key performance measure for enterprises.