[GTO]

As if the suffering from the virus wasn't enough, my heart goes out to those that have lost their jobs / businesses. And we still haven't bottomed out IMO. The worst is yet to come, we will see that in the economy as well. This is the rainy day you saved up for, guys. Be cautious with spending money. Hope no BHPians or their friends / family have suffered like the examples in this article.

An excellent write-up from the New York Times

The shop, called the Right Fit, opened in February 2020, just weeks before the coronavirus struck India. Prime Minister Narendra Modi abruptly enacted one of the world’s toughest nationwide lockdowns to stop it. Unable to pay the rent, Mr. Anand closed the Right Fit two months later.

Now Mr. Anand, his wife and his two children are among millions of people in India in danger of sliding out of the middle class and into poverty. They depend on handouts from his aging in-laws. Khichdi, or watery lentils cooked with rice, has replaced eggs and chicken at the dinner table. Sometimes, he said, the children go to bed hungry.

“I have nothing left in my pocket,” said Mr. Anand, 38. “How can I not give food to my children?”

The heady growth forecasts feel far away for Nikita Jagad, who was out of work for over eight months. Ms. Jagad, a 49-year-old resident of Mumbai, stopped going out with her friends, eating at restaurants and even taking bus rides, unless the trip was for a job interview. Sometimes, she said, she shut herself inside her bathroom so her 71-year-old mother wouldn’t hear her crying.

Last week, Ms. Jagad got a new job as a manager at a company that provides housekeeping services for airlines. It pays less than $400 a month, roughly half her previous salary. It could also be short-lived: the state of Maharashtra, home to Mumbai, announced lockdown-like measures this week to stop the spreading second wave.

If she loses her new job, Ms. Jagad is still the only support for her mother. “If something happens to her,” she said, “I don’t have the money to even admit her in the hospital.”

Anil G. Kumar, a civil engineer, was one of them. Around this time last year, he and his family were about to buy a two-bedroom apartment. But when last year’s lockdown hit, Mr. Kumar’s employer, a construction chemicals manufacturer, slashed his salary by half.

“Everything turned turtle within a few hours,” he said. Three months later, his job had been eliminated.

Now Mr. Kumar spends his days in his home in a working-class neighborhood in the western part of Delhi, searching for jobs on LinkedIn and taking care of his son.

The family’s middle-class life is now under threat. They survive on the $470-a-month salary Mr. Kumar’s wife draws from a private university. Instead of holding a big celebration for their son’s 10th birthday at a restaurant, which would have cost nearly $70, they ordered a cake and a new outfit for about one-fifth the cost. Mr. Kumar also canceled his Amazon Prime subscription, which he hadn’t used in a while.

[patron]

The other side to this picture is that we hire hundreds of blue-collar workers for our business. Since lockdown, we have been struggling really hard to find people. Most of them have left cities and haven't come back and the few who are still around have so much demand that they jump from job to job with a very small pay increase.

Even the supervisors and other senior jobs are getting difficult to fill due to the above reason. Ironically, businesses like ours are suffering from a lack of manpower when the unemployment rate is at one of the highest ever.

[Arun_S]

Seeing this in my friends circle, It is my opinion those who had small manufacturing units suffered a lot, when lockdown was lifted companies didn't provide orders as they themselves were trying to stabilize. Plus labor shortage's didn't help their cases.

One friend after 6 months of struggle, just now has got a order and is executing speedily but is really fearing the impact of second wave.

[SmartCat]

The NYTimes article might be behind a paywall for some. The same article is available on Economic Times here:
https://economictimes.indiatimes.com...w/82112290.cms

Tip: If any article on a news site is behind a paywall, just google search the article title. Very likely that such an article will be syndicated to another news website, and available for viewing.

[TrackDay]

It is always the middle class that is impacted the most since ages & the coronavirus has offset the lives of many around the globe and one can only breathe a sigh of relief once this pandemic is behind us. In the recent few years, spending has gone up rather than saving especially amongst us millennials and younger couples/families. The first thing I got rid of during the pandemic is Instagram. Yes, I still have an account, but not the app on my phone. People who have less, take a loan and visit exotic locations, buy the things they cant afford to impress others. Folks who view these snaps on Instagram fall into the same trap. 'FOMO' or 'Fear Of Missing Out' is something that is prevalent amongst my generation. This indirectly leads into unnecessary spending. Due to the Almighty's Grace I have not been impacted by the Pandemic so far, but I have changed my priorities, moved away from the herd mentality and decided that happiness will come from what I deem fit. Spending time with family members, taking care of our lands, gardening, playing with pets has brought about so much joy and energy into my life. I am not going to pay huge bucks for opening night of that latest movie, and don't mind missing out on that, besides the stars are already rich and have been buying expensive cars left and right even during this pandemic pan India. I also removed food delivery apps and have fresh food/snacks/home meals whenever the hunger pan sets in.

Regarding generating employment, the only thing a normal guy like me can do is set up repair/restoration works at our premises, lands etc. Though not much, it generates incomes for folks like masons, painters and daily wage workers.

The ones most hit by the pandemic were definitely the Aviation, Tourism, hospitality and transportation sector. The sector that could raise jobs and provide employment were Healthcare, Pharma, IT, E-learning etc.

Image Source: https://www.moneycontrol.com/news/bu...0-6334431.html

Financial woes brought by last year's coronavirus pandemic have pushed about 32 million Indians out of the middle class, undoing years of economic gains, a report showed on Thursday, while job losses pushed millions into poverty.

The number of Indians in the middle class, or those earning between $10 and $20 a day, shrunk by about 32 million, compared with the number that could have been reached in the absence of a pandemic, the US-based Pew Research Centre said.


A year into the pandemic, the numbers of those in the middle class has shrunk to 66 million, down a third from a pre-pandemic estimate of 99 million, it added.

“India is estimated to have seen a greater decrease in the middle class and a much sharper rise in poverty than China in the Covid-19 downturn,” the Pew Research Centre said, citing the World Bank's forecasts of economic growth. Nearly 57 million people had joined the middle income group between 2011 and 2019, it added.

Source: https://www.business-standard.com/ar...1900032_1.html

[V.Narayan]

The pandemic has been the worst social and economic disaster-tragedy-crises that has hit India since the trauma of the partition in 1947. The partition and its bloodshed, massive as it was, remained restricted to two geographic regions of the country. Not so Covid19.

Yet the Central Govt and State Govt's of all political colours have failed to recognize the extent of this calamity and have respond to it as another ordinary crises to make political capital out of. Despite a year gone by we did not spend on beefing up hospitals, ventilators or oxygen supply. Despite having some of the largest vaccine makers in the world we are short of vaccines because the Central Govt isn't willing to pay even the full cost of manufacture let alone a fair price. The Central Govt won't let the States procure vaccines or pharmceuticals on their own and then allegedly use an imbalanced central supply to score political brownie points. Some State Govts have allegedly imposed a practise of under reporting deaths and infections in order to show case their efficient administration. More salad less meat.

Economically speaking this crises has hit urban India a lot more than it has rural India. But now over 35% of India lives in the urban areas. Not a small number -~49 crores {pre-Covid number}. And the unorganized sector and MSME sector that got damaged by the lockdown and subsequent impact are all largely in the urban areas. Unfortunately our political class remain focussed on grandiose buildings. As we used to say in college, abhi film baki hai.

Sadly as a nation we are headed to become the global poster boy of how not to have dealt with the pandemic.

[VKumar]

It is indeed the middle class that aspires for the most, and loses the most! Feeling really sad for this situation.

When it comes to small scale industry, it is really badly hit. My cousin is a decent sized sub vendor for two giant vendors for Hero MotoCorp, and Mahindra. He has been running behind these guys just for the delayed payments since months, still no respite. He has very well summed up the situation once:

“This COVID has given the companies a right to arm twist as the Govt. has gone a bit lax”.

Actually I do agree with him, I was working with Aditya Birla Group last year when the COVID hit, although nobody lost their jobs, but the kind of work pressure, especially on the lowest rung of the sales team was beyond acceptable - people were staying and working just because of the fear of a job loss, and the organisations have shamelessly encashed on it.

But even more important is the reason behind this attitude or bigger organisations?
The owner won’t pay from his pockets. I agree.

But there is a bigger reason, which I could very well see as I was more into a role which was all about liaison in with higher and top level officials of banks and financial organizations. The reason for more of the agony of the middle class today is the lifestyle and aspirations. See, I am not saying that one must not have aspirations; but yes, weighing of the options and growth prospects is extremely important. I am really unable to understand how people keep on taking the risk of accumulating loans after loans, some are paying EMIs which are up to 60-70% of their salaries, and our private banks; they just keep giving even after 40% breach.

Now, if someone has so well trapped himself or herself in a debt trap, then he/she is at the mercy of the employer or the market in case you are into a business. And always remember, one is safe only till the moment their employer or the market doesn’t know about them being on the life support. Once they know it, they start treating you with a finger on the button.

Why this situation is bad?
Because this situation makes you conservative. Instead of taking the risks, people either stop taking risks altogether, or they just take the risks of too high a magnitude.

How is it linked to Poverty due to COVID?
It isn’t directly. But, when the situation outside is grim, and when you don’t have substantial deposits to back you in case things go haywire, then making aspirational purchases or taking the risks of herculean magnitude doesn’t make sense either.

I know a few guys who are heading towards the same situation, not because their income is poor, but because they just accumulated a bit too much of the debts when things were rosy, and now they are stuck in a situation between eating and paying. It is over my head that how a few people, just to look cool; end up buying a Creta with a take home of 50-60k without any other source of income or well established financial backing. With just a hope that they will switch the job, get the hike and it will be all good. I belong to the conservative class, and I am feeling immune because probably my inspirations are lesser - I don’t see any another reason behind it. EMIs are probably the biggest reason behind the middle class people being pushed towards the poverty.

Small businessmen, once I asked a guy if he has proper life and health insurance cover, and he shrugged the idea off saying “it’s not my need”, this is the first thing one needs in a rainy day.

Post COVID pent up demand:
This is the biggest reason IMO. I personally know people who availed all the moratorium for 6 months, and then made another big ticket purchase from the saved money - just in the hope that it’s gone now and economy is growing, now they are caught in pants down situation. You guys really think that economy actually grew post first wave COVID? I attribute it all to just the pent up demand, it was the held set of requirements, as well as the additional money with the people that they saved due to moratorium and work from home etc, especially the salaried class - they drove the demand; business class was already quite vary. Now the clouds again got darker, business class is not in the situation of spending - salary class will pull their hands back owing to the risk. Result? The domino effect risk!

Our rural economy was already in more or less a jeopardy. Agriculture is a neglected sector, no matter how rosy picture the govt. may try to show. Urban consumption expenditure, and service sector have been our backbone. Household consumption forms over 55% of the GDP.

Now try to imagine the situation when this urban consumption expenditure starts going off track. Service sector is the actual saving grace today, nearly every other sector is moving towards or reporting losses (loss == no tax == lower tax revenue for Govt. too). This is the time for bigger steps. Else as suggested by V. Narayan Sir - “India is on the way of becoming a poster boy of how not to have dealt with a pandemic”.

[aargee]

Although this wasn't evident last year, I'm seeing many changes starting 2021. The below belonged to one of my known acquaintance, we even went & had food there for our part f support, but now it's closed

https://www.zomato.com/chennai/bread...nna-nagar-east

IMHO, most of the small yet essential business are the only ones surviving now. We have a huge roadside vegetable market to regular vegetable & fruit markets, butchers shops, Sunday fish market, small hotels, petty tea shops, water vendors & suppliers, small sweet & snacks shops, grocery & medical shops are still making some money. Even the fuel station is witnessing mostly folks who refuel for Rs 50-100 & this is prevalent entire TN (atleast what I've witnessed now)

No question on biggies from supermarket to textile to chain of shoe stores who're still thriving.

Small time multi brand two wheeler dealers who finance independently (non bank) who're existing for long time are still able to make the ends meet (dealers are out of question, they're anyway surviving); others who've opened in last 3-4 years have gradually disappeared. Just last year, someone opened a new workshop called Dr. Superbike & I was waiting to talk to them & see how they fare, but I haven't see a single day where they're open until now. God knows who're the owners.

All the luxury & good to have kind of businesses are closed or on the verge of closing; like the guys making pizza (non chain, unlike Pizza hut, Dominos etc), small shops selling fancy food (like mojito, strawberry milkshake kind), franchising branded textiles, furniture shops selling wooden furniture, shops selling curtains, photo studios, independent electronics resellers are counting the days.

This is not just with the business, last week one of our colleague passed away in Bombay due to covid leaving his Wife behind; he was 38 & a moment of silence for his 2 young daughters; God knows if he had paid in full for the house he bought in Lodha. We don't know how many such employees are victims until now & how many loans are defaulted. Right now I see extremely advertised real estate plots being sold a little farther from my locality. Not sure if it's to make make the most by the realtors or the prices have been corrected...but yes, the housing seems to have corrected itself. What used to retail for 25-30L is not 21-25L now.

Yes, these are hard times & it's pretty evident things will be like this...but...

This afternoon I accompanied my Mother to the health center for 2nd dosage of vaccine (for a moment let's forget they're running out of stock) & they're running out of A4 sheets, using their personal mobile for making calls to patients (no govt landline or phone aid), there's no helper for cleaning the health center so the disposed covid testing kits are right outside and the staffs have to take double role as nurse as well, cleaner, helper & running between govt bodies for aids managing the other operational issues. Mind you, this is run by Govt & this is part of Greater Chennai (what's so great?)

I however have one question that leaves unanswered, even if we consider a day when this pandemic gets over, what's one strong field that could power India's economy as good as a developed country? Germany had automobiles, Japan had electronics, Koreans & Chinese followed the suite; what's one promising field that could fuel us?

[V.Narayan]

Some of the agony of those who lost jobs or shut down their businesses arises from the consumer debt they carry. Consumer debt is predicated on economic success of the person and the country staying on track. I can't blame the young and not so young of India for driving their aspirations on the steroid of debt. From 1999 to 2019 the economy grew at a steady 6.5% plus each year with the exception of 2008-09. An entire generation has grown up never having seen a faltering economy till 2020. any Indian below the age of 43 had till last year seen only an upwards and onwards type of economy in his/her working life. And any Indian who joined the work force in 1993 or later has never seen a sinking economy. So it is not surprising that consumer debt is so widespread.

Ironically Citibank who started the business of consumer bank loans in India in the early 1990s are now packing it up!

[Nissan1180]

The hundreds of LinkedIn posts requesting help to find a job from students of even IIM like colleges shows the extent of devastation. India was on a decline since the last 5-6 years and this pandemic destroyed the few sectors creating jobs. In the automotive field, two companies I know about shut and both had many highly paid jobs for engineers, HR etc.

I fail to understand why people don't realize that salaries have stagnated completely except a few niche tech fields. There's no top level government vision, no deliberate strategy to prepare the country for the future. Scientific research is being defunded, universities being asked to increase tuition fees at a time when the country spends more on "tax administration" than healthcare, education and R&D combined.

[AYP]

With all due respect to the members who may have an alternate view, in my opinion, it is the lockdowns and not Covid-19 which has caused this socio-economic mayhem. Now some people may say that Covid-19 and lockdowns are linked, but no, not in my opinion. Other than the first phase of the national lockdown(till the mid of May 2020), the lockdowns have taken more lives than the lives they may have saved. The problem is, as long as someone is breathing, the government is least bothered. So what if his/her entire social life goes for a toss? So what it the kids are unable to go to school? It is life vs livelihood right? Wrong.

The Right to Life in our constitution(Article 21) also includes the Right to Livelihood. And this right is being snatched away by these lazy measures called lockdown. I was personally expecting at least some person across India to file a court case against 'lockdown' but at least I haven't come across any.

Yes, if I feel so strongly about these lockdowns, maybe I should be the one to do something about it right? As they say, be the change you want to see. Aah, well, I am just an armchair expert who might feel wronged but is also complacent.

Rant over! Back to under the blankets.

[aargee]

Originally Posted by V.Narayan

any Indian below the age of 43 had till last year seen only an upwards and onwards type of economy in his/her working life. And any Indian who joined the work force in 1993 or later has never seen a sinking economy

Not really Sir; 2000 to mid 2003, 2007-2009 was such time, atleast IT recession that spiraled many other business (cab drivers, small food & fancy eateries & many many loan defaulters)

2001 also witnessed many US returns; some of them were so frustrated that they did few things that will land them up in jail the moment they set foot on that land again.

Originally Posted by V.Narayan

Ironically Citibank who started the business of consumer bank loans in India in the early 1990s are now packing it up!

Oh God!!

[libranof1987]

I don't have sufficient data to back this up but I do fear that the worst is yet to come. 2021 is seeing the after shocks of the lockdowns from last year and a cumulative effective of 2020 + the chaotic mess that this year is piling on top of it will make recovery long and painful.

Originally Posted by AYP

I was personally expecting at least some person across India to file a court case against 'lockdown' but at least I haven't come across any.

Probably hasn't happened in India but has been debated in the US. Here's some read:

https://www.theatlantic.com/ideas/ar...tution/608665/

https://today.yougov.com/topics/poli...ll-survey-data

Several people have stated they won't follow "shelter in place" - their version of lockdown (because, they have to do things differently) because moving around is their constitutional right. Heck, several states such as Florida have even refrained from lockdowns.

[warrioraks]

The biggest red flag for me is the fact that stock markets are now considered as proxy of economic wellbeing of a nation. India started playing this game as well which led to overlooking the pain of less affluent sections of the society, eventually making them suffer in silence.
In the current scenario, it seems the affluent middle class population is being pushed to the other side which is heart-wrenching to see. Not only on humanitarian grounds but also because of the fact that we can easily relate to these stories. These folks are just like you and me, the only difference being that they have either made some error of judgement in the past or it was sheer bad luck that struck them.

Covid has shaken the country like no other thing I have seen in my lifetime. I don't know whether we need lockdowns or not, but one thing is for sure, we are in a country where humans are in excess. And like that old adage 'Things in excess lose their value', Covid just re-taught us - Human life is cheap in this country and alas, no-one is insulated!

[srishiva]

I dont know how many more months this agony is going to last. For now, there are jobs that still are dependent on developed countries' economies and we dont see that much of an impact in IT.

Some of my friends who started their companies a year before the pandemic and were just stabilizing had a hard hit. The first thing was the building rents. Now they are trying to do something working from home. There is no support from govt as usual.