Eastern countries likely to emerge stronger from Covid than Western: Cosmos Bank Chairman

Even though many economic experts believe that the second wave of the pandemic in India is more of a humanitarian crisis rather than an economic one, it has still not left any stones unturned in hampering the economic recovery which was becoming apparent from Q3.

To assess the magnitude of the impact of the second wave and determine the way forward for business and investments, Ten News organized a panel discussion on Thursday which was hosted by Dr. Rudresh Pandey.

Dr. Pandey was joined by expert speakers including Aditya Kashyap, investment banker and Ex VP – JP Morgan, Milind Kale, Chairman, Cosmos Bank and; Prof. Manoj Pandey, Professor of Insurance and Marketing at BIMTECH.

Dr. Pandey opened the discussion by citing Chinmay Tumbe’s book, “age of pandemics”, where he talks about how the Spanish flu of 1918-20 changed they way of living and doing business and led to the rise of the west.

Showing optimism about India’s economic rise, Kale said that even though the west leveraged the 1918-20 pandemic, the east is more likely to benefit from the current pandemic because the resources and intelligence are here in the east and not west and also because the east has a better capacity to turn adversities into opportunities.

When asked by Dr. Rudresh Pandey about how the MSMEs can cope up with the pandemic, Milind Kale said that the smart entrepreneurs or industrialists have learnt optimum use of resources, they have cut down on unrequired machinery, office setup, marketing setup, and still their business is flourishing.

Kale said that the MSMEs will have to learn from them and stop the unnecessary expansion in their units. Some things are better to procure from outside than develop inhouse. Many MSMEs made unnecessary investments in land and building, machinery etc., he added, saying that they must revisit their Capital expenditure program and bring in new technology.

While talking about the impact of Covid-19 on employment, Aditya Kashyap said that while people in the formal sector are secured, the people working in the unorganized sector are always the first one to get hit by a calamity.

“Government should bring in social security act, like in western countries, to cover the unemployed people during these types of situation,” he added.

Kashyap further talked about some industries like pharma, fintech, banking and technology that are performing well even during the pandemic and have a potential to give decent returns on investment.

Manoj Pandey, while speaking about the insurance penetration in the MSME sector, said that insurance is not very popular in the MSME sector especially among the micro units as they find it difficult to understand insurance and it is not their priority. Though things have changed in past 4-5 years, and now SMEs have been established as an important vertical in the portfolios of insurance companies. They are upselling insurance coverage with loans to provide coverage against loan repayment risk.

Unfortunately for MSMEs, the pandemic was not covered by the policy that they had bought. In some parts of the world, the courts had ordered the insurance companies to help them out. However, it is not possible for a company to settle pandemic-related claims on its own, so, in India, a pandemic pool is being created to financially help uninsured citizens whose incomes or health get hit by covid or any other pandemic in future.

Further Prof. Manoj Pandey gave some financial suggestions for individuals to help them deal with Covid-19. He said, firstly, everyone should have enough liquid assets that can pay for the expenses of the next 6 months. Next, every earning individual should have a term insurance with adequate coverage amount which can insure their family for atleast 5-6 year incase of their death. Term insurance is also very important for young adults who do not have enough savings or investments. Finally, health insurance is also a must because hospitalization can wreck a financial havoc on a person. Prof. Pandey recommended Family floater health insurance plan and said that having a health insurance plan gave him confidence to fight Covid as was not worried about the hospital bill. 

In his concluding remarks, Kale said that the rural demand has been affected during the second wave unlike the first wave when there was no affect on the rural demand. However, this will soon be revived as the Covid cases have started to dip and the country is expecting good rainfall this year.