Here is the link to the article https://twitter.com/neelkanthmishra/status/1257836711670804481?s=08
In this article Neelkanth Mishra, co-head of APAC strategy and India Strategist for Credit Suisse, is talking about impact of Covid 19 on income of people, companies and government.
He starts with talking about the situation of Covid 19 in India. He says that Covid 19 will remain with us for a long time until a vaccine is not discovered. This means that many small workers will be impacted due to no income.
He explains impact on demand by giving two examples, first of electricity generation that how the generation was allowed in first lockdown but as the demand fell, generation and distribution companies suffered. Second example he gives is of fuel retailing. As the demand for fuel fell it not only impacted fuel retailing companies but also refineries.
He then talks about various researches done in past few days which show impact of income loss. It showed that Rs. 8.5 trillion will be the loss but he states that impact of other lockdowns and the long fight with Covid 19 is not fully reflected so we should assume the loss to be around Rs. 10 trillion.
Who should bear the losses?
Income in an economy is split between individuals, corporations and government. On corporations, he says that fixed costs like rent, salaries, interest etc. will not be deferred so their share in losses would be higher. Government too would loss more than normal because of loss of taxes, spending on healthcare, providing food for poor people etc.
For individuals he said that their point was beyond debate. The loss would be more if corporations fail to make money because these firms pay taxes, create employment, and consume too. As the business will suffer, unemployment will increase which will lead to further loss for government (as these workforce pay taxes too), also firms will stop consumption. There will be risk on financial sector also because if there will be income loss then NPA’s will increase.
Instead of government coming when all these losses have occurred, it will be good if government takes action now.
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