Covid-19: It Is A Long Haul For India Inc

Corporate recovery hinges on how well the virus is handled, a strong economic stimulus and willingness of banks to lend

- N Madhavan

MATTERS OF FACT

Nassim Nicholas Taleb gets irritated when people call coronavirus a ‘Black Swan’ event. The celebrated author who coined the term for describing events ‘that lie outside the realm of regular expectations’ but have ‘extreme impact’ in his 2007 book of the same name would rather prefer to call it a ‘White Swan’ event.

After all, people like Bill Gates had clearly warned of an impending pandemic. Whatever its classification, COVID-19 has caught companies across the world by complete surprise.

The resultant shock has upended established business models of many and laid to waste carefully crafted business plans of almost all of them.

After all, it took the virus just three months to infect over 2.6 million people across the world and kill as many as 1.80 lakh and, in the process, locking down half the global population.

The economic impact of the virus, still unravelling, is something the world has not seen before.

Under the circumstances, the question uppermost in the minds of entrepreneurs is ‘how bad will they be hit before normalcy is restored?’ While it is too early to provide a definitive answer, one thing is certain — they have to prepare for the long haul.

This crisis will be far worse than the 2007-08 financial crisis. When the global financial meltdown happened then, India was in the midst of a strong demand growth. Companies were in a better position to handle the shock supported by a banking system that was reasonably healthy. Also, the crisis lasted just six months.

Coronavirus, on the other hand, manifested at the most inappropriate time for India Inc.