2022, the Year of ‘Uncertainty’

 

The year 2021 has come to an end as it had begun. It was a hard year that threw us all into an ‘uncertainty’ of unpredictability resulting in anxiety, depression, and sorrow. Amidst the fear that something is looming around the corner, which has almost become an inescapable presence, people all over the world faced similar plight—scrambling to find comfort, hope, and relief, however fleeting it might be.

Rapid vaccination drive in certain parts of the world did help avert the worst effects of Covid-19, but scientists expect it to assume endemic status soon causing cyclic and seasonal waves of disease. The hardest part of the emerging scenario will be that this disease is not a temporary phenomenon and hence calls for a paradigm shift in our business set-up and societal make-up—calling indeed for permanent behavioural changes.  

Amidst this persistent threat, businesses were challenged by the disruptive crisis: millions of workers have dropped out of the labour force—a ‘Great resignation’ momentum was set in motion in the western world. As the business leaders are grappling with this new problem, the very future of work has now become a hot topic of debate. Though much is being talked about ‘Hybrid work’, the fact remains that we do not know how working environment will evolve in 2022. Yet, one thing is for certain: management of people and talent has acquired a new importance.

The pandemic has, also accelerated the adoption of digital technologies by companies, for companies with digital edge were found racing ahead of the rest. ‘Cloud’ and IoT have become two very closely affiliated internet technologies of the day. But there is a challenge embedded in the digitalization of businesses: inclusive growth may be impaired. Indeed, digitalization is all set to trigger layoffs to save costs and realize growth in productivity. Simultaneously, it may lead to labour tensions in terms of skill-mismatches, rising unemployment and stagnant wages. The tech landscape thus sounds pretty complex and calls for a careful assessment of its scope for fuelling sustainable and inclusive growth. 

Rising inflation has become another challenge all over the globe—even the traditionally low inflation countries like the US and Germany are reporting inflation close to 6%, a three decadal high. The accommodative monetary policy of the RBI though served the economy well in the early phase of the pandemic, the delay in withdrawing the excess liquidity in the system by it has resulted in wholesale price inflation reaching 12.54%, the highest in five months, and it is only a matter of time before it gets translated to higher retail prices. The price increases and higher wages that are witnessed in many countries may throw the already disrupted global supply chains into further disarray. This means, inflation would not remain as a ‘transitory’ but soon will assume a permanent threat unless tackled immediately and that is what the US fed is aiming for now. Here, it is worth remembering that high inflation impacts the poor disproportionately, for they do not have staying power nor are there any social safety nets.

It is amidst this intense feeling of fear, helplessness, and desperation that the world looked forward to the dawn of the New Year, 2022 hoping it would reanimate the human heart. But with the dispiriting news of the emergence of a new variant of coronavirus, Omicron, the common man on the street is once again afraid of his economic fortunes.

Encouragingly, despite the resurgence in concerns about Omicron, Indian businesses are found to be pretty optimistic about 2022: they are very bullish on private investment and growth in the economy. And, this is not an ill-founded optimism, for India’s GDP during the second quarter of the current fiscal grew by 8.4%. Another noteworthy feature of this growth is that as against the contraction noticed in all sectors except agriculture and electricity during the Q2 of the previous fiscal, this time around, all the sectors did well: indeed, grown sequentially.

But the challenge posed by the Omicron to employers in terms of keeping their workforce safe while meeting their business needs, may derail the growth process. The only hope for the economy in such a scenario is for the government to focus on capex to boost growth. The National Infrastructure Pipeline, perhaps needs reassessment and in particular, realignment of its timelines. Also, its funding, for obvious reasons, needs to be delinked from asset monetization to strengthen the ongoing growth momentum, and achieve the aspired for double-digit growth in GDP. Startups emerged as a silver lining in the Indian scenario, which the government should support out and out as they are found generating employment, particularly in tier-2 and tier-3 cities. While prompt corrective measures are needed to keep inflation under check, fiscal consolidations would need to be calibrated carefully so as not to disrupt the ongoing growth process.

It is with our inherited indomitable spirit and resilience that we must face the threat posed by the coronavirus collectively and responsibly to help the economy wriggle out of its grip.

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