The darkest hour is just before dawn. India will emerge stronger: TeamLease chief Manish Sabharwal

India reported a record 2.95 lakh new Covid-19 cases in a day, with pleas for beds, medicines and oxygen continuing to pour in from different parts of the country. Reports suggest that multiple local lockdowns have already decelerated business activity in the last few weeks. But amidst the gloom and doom, Manish Sabharwal, Chairman of HR services firm TeamLease, is optimistic that India will come out of the crisis much stronger and also spelt out reasons why the second wave is vastly different from the first, as people, businesses and doctors are better prepared, apart from the fact that there is a vaccine this time around. Sabharwal, who serves on various State and Central government committees on education, employment and employability, spoke to Moneycontrol’s Chandra R Srikanth. Edited excerpts:

What is your assessment of where we are in the fight against the second wave of Covid19, in light of the announcements on vaccines, micro containment, etc. 

I think that at this point all policies can focus on is that the disease doesn’t lead to death, unemployment doesn’t lead to hunger, and liquidity problems don’t lead to bankruptcy. I think the second lockdown is different, the second wave is different. Companies have digitised infra and variabilised (sic) costs. The government has realised that shareholders don’t pay salaries — customers do — so they aren’t encouraging a national lockdown. Doctors and hospitals have learnt protocol.

I think expanding vaccines, deregulating prices of vaccines will have a massive supply response. Migrants are not as jerky. But I think it is very different from last time. In the short term, you will focus on hunger, death, and liquidity, but I think overall, Covid is not climate change, it is a passing shower. The policy window that Covid gave us, India at the end of this will come out structurally much stronger.

But don’t you think we wasted the window we had and dropped the ball — we didn’t take warnings of the second wave seriously, we didn’t stockpile, we didn’t vaccinate at scale. 

I am not sure we dropped the ball. Vaccine capacity was taking time to get up. The government was not holding vaccines to people above 45 because they wanted to but because they had to. You can take the view that we should not be exporting, but these are complex tradeoffs that policymakers have to make between vaccine diplomacy and vaccine coverage.

Post mortems have a certainty that prescriptions don’t, so when we look back, there are obviously things that could have been done differently that every decision-maker doesn’t know when they make it. If you take the long term view, we have huge reforms in labour, education, banking. I think the policy window will change the trajectory of India.

Prime Minister Modi emphasised that lockdowns should be the last option but multiple local lockdowns are already hurting business activity, with more declines likely. What impact is this likely to have on growth and labour? 

All supply-side shocks will impact GDP... the question of what is the difference between a national lockdown and regional lockdowns will be known only in retrospect but the impact will be lower. There is no inter-state challenge in the movement of trucks, trains and airlines. There will be some impact but I do think it is very different from last year... It is better regulation of tradeoffs between lives and livelihoods. I don’t think there are good choices here, there are only bad and worse choices and we are picking the least bad choices.

But the virus also seems to have hit closer home this time; it’s hit the working-age population in a bigger way...

I am not sure it hit closer to home; last year was quite devastating for everybody. I think it also reminds us that we tend to focus on issues when it comes to our vicinity — where you stand on issues depends on where you sit. I think the last year or this year has had the same impact on people who are not in the formal sector — on women more than men, smaller companies more than big companies; the pre-existing faultlines in our labour market are being amplified by Covid. Informal sectors don’t have any margin or the ability to hold on. The big ones are getting bigger because the smaller ones are falling apart. At some time you have to think about concentration implications but it will get compensated by the digitisation super cycle. Net-net the policy window, formalisation, many things are happening. So, I don’t think you will have that kind of 26 percent unemployment or a 25 percent GDP fall that we saw in the first quarter of last year.

It is not a national lockdown and also there is light at the end of the tunnel: vaccines. Last year, there was no light at the end of the tunnel. Economies are more a mind game than a physical game. Ten percent of our population is vaccinated, once we get to 30-40 percent, there will be a substantial difference. The darkest hour is just before dawn. With vaccination and other moves, I don’t think we will be like last year.

Is there a specific factor that is making you optimistic? 

Vaccines are the light at the end of the tunnel. It is a tragedy that the second wave came just two months before vaccination got to a critical mass and obviously, in retrospect, we could have accelerated. With vaccines being opened, the supply-side response will make this time different from last time.

Is this going to be the new normal? Viruses keep mutating, should we prepare for a third, fourth wave? 

I don’t think anybody knows that. We have to accept that we don’t know. The future is uncertain and that is what makes it difficult but also interesting. I would be careful about viewing Covid as climate change; it is a passing shower. There may be some recurrences, but what it has done is, it has reminded us that resilience is as important as performance. Too many supply chains had become just in time; now we have to make them just in case.