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Coronavirus and its Impact on the Economy: exploring threats and opportunities

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Coronavirus and its Impact on the Economy: exploring threats and opportunities

Coronavirus and its Impact on the Economy: exploring threats and opportunities

Madhuri Saripalle, Associate Professor, Graduate School of Business, IFMR, Sricity.

The world economy is facing one of its worst crises since a century. Economies across the globe are seeing a sharp contraction in growth caused by the economic lockdown to control the spread of the virus. This has led to a supply shock, reduction in output, employment and consequently, demand. The Indian economy was already facing serious structural issues and facing a downturn, which probably have receded to the background with the more serious threat of the pandemic at hand. Two important questions are: a) when will the economy restart and what will be the sectoral response; b) what policy measures can speed up the recovery process? It is also a time to reset the economy by creating skills and improving productivity through innovation.

To address the first question, as economies restart, there will be varied response across various sectors. For example, industries such as essential goods and services such as drugs and pharmaceuticals, essential health and financial services such as insurance, production of essential foods such as pulses, etc, will see rapid growth, while industries and services which are based on discretionary spend like restaurants, entertainment, tourism will be hard hit. More detailed analysis can be read here and here. The impact of economic slowdown is widespread because almost every sector is dependent on trade and global supply chains. The pandemic is a double whammy on an already existing slowdown in the economy, which is a an area of much more serious concern.

In this article I will analyse the structural imbalances in our trade sector which have got further amplified with the pandemic and explore how these can be addressed.

Lack of diversity in Trade basket-opportunity or threat?

In our trade basket, if we exclude textiles, the exports and imports are concentrated in just a few products. The top 5 commodities constitute 60-70 percent of total exports and imports in India (table 1). It is time to create comparative advantage in labour intensive sectors such as leather, sports goods, automotive ancillaries to increase employment. The pandemic has given us an opportunity wherein supply chains will be re-routed from the manufacturing engine of the world-China to India so that we can prepare ourselves to skill our young workforce and increase productivity in export-oriented sectors.

Table 1: Diversity in Trade basket in India

S.no.Commodities% Share in Exports% Share in Imports
1Mineral Fuels, Oils and Products1432
2Gems and Jewelry1212
3Textiles101.4
4Electrical Machinery and Equipment511
5Nuclear Reactors, Boilers and parts79
6Organic Chemicals64
7Vehicles other than railway or tramway51.1
8Pharmaceutical Products50.5
 Total6371
 Source: EXIM database. Ministry of commerce, GOI

Decline in trade from November 2019: when will green shoots emerge?

The decline in exports and imports started from November 2019 onwards when sectors such as jewellery, textiles, ores and minerals registered fall in exports. Important sectors such as oil, coal, iron and steel, transport equipment and electronic goods declined as well reflecting decreased economic activity. During January-March 2020, with the exception of ore exports and transport equipment imports (mostly railway and locomotives, boats and floating structures), there has been a widespread decline in trade due to supply chain disruptions. As countries emerge from lockdown, there will be revival in economic activity and there should be enough policy measures both on the supply as well as demand side simultaneously for a balanced pick-up in economic activity.

The Call to Adventure

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The Call to Adventure

Call to adventure

The blog is written by Sameer Abraham Thomas. The Author is a Faculty Associate, Centre for Writing & Pedagogy at Krea University.

21 July 2020: I got up earlier than usual today. The sound of rain woke me up at half past six in the morning – or perhaps it was the cessation of the sound; my father told me it had started raining earlier and had abated a little by 6:30.

Waking up in the dark, some pale light shining through the one window in my room, I listened to the soft drumming of raindrops on some roof somewhere, possibly ours, as if it were an alarm, rousing me from my slumber and calling me to adventure.

It seems to me as I write this that every morning is a call to adventure in some ways. What is it that gets us out of our beds? An alarm, perhaps – some sudden sound; or perhaps the cessation or change of some white noise that had lulled us to sleep at night, or that had slipped seamlessly into our ears at some point after we had nodded off and only just now felt the impetus to leave.

Sometimes, we wake up because someone is calling us, and the reason they want us awake and not asleep is our call to adventure. Sometimes we ignore the call and stay in bed. Adventure calls to minds that are not ready to hearken to that call. They are not yet ready. But one day…

I remember long periods of time when my mind wasn’t ready. It was either too busy making itself anxious or curling up in a defensive ball, paralyzing me to protect me from the dangers posed by any and every adventure, no matter how small. Those were not happy days, but maybe they were necessary at the time. Shields do protect us, but they wear down over time, unless withdrawn to make way for a sudden spear. And a worn-out shield can protect you no more than can a mind, tired of defending itself against itself.

The shield falls and then there is nothing left to insulate ourselves from the call, but now we are too exhausted from the battering of our shields to be able to respond. We lie in bed and listen to the call resound like some song at a festival we know we might love but which we are terrified of losing ourselves in. It takes time and courage to realize that perhaps joy lies in letting ourselves get lost; the challenge of facing the unknown, the challenge of choosing the right path, the challenge of fighting the world and not ourselves, and then the challenge of finding our way home – perhaps it was this that our minds were preparing themselves for all along. It took time, but finally they were ready, and then they fell before us, the clang of the fallen shield beginning yet another call to adventure as the spear finally finds itself in our hands. The call to adventure – we didn’t recognize it then. But, if we persist… today, we might.

Current Trends in Banking and Finance

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Current Trends in Banking and Finance

Current Trends in Banking and Finance

The blog is written by C. Krishnan. The Author is  Director, Financial Assistance & Senior Advisor, IFMR Graduate School of Business, Krea University.

I joined the banking industry in the pre-computerized era and have seen the many changes over the last three decades. However, the changes that I have witnessed in the last 10 years have probably been significantly more than what I had witnessed in the previous 25 years. The banking and financial services industry has been turning its focus toward innovation to prepare for a future that will be increasingly driven by technology.

Customers and prospective customers are no longer dependent upon banks as they used to be many years ago. Competition from shadow banking and Fintech/TechFin companies is growing. Lakshmi, Pepper, Nao, Ira and, Xiao Long may not be familiar names for the common person; however, they are quite familiar to the banking fraternity. What are they? They are humanoid robots and chatbots that are creating a revolution in the Banking and Financial Services Industry.

Some of the key trends that are re-shaping the BFS industry are:

A. Digital Transformation:

The industry is witnessing a continued and aggressive focus on digitization and the adoption of new and emerging technologies to bring in operational efficiencies, enhance speed-to-market and deliver superior customer experiences. Banks are cutting down expenses on branches to invest in self-service digital channels as mobile and online banking become more popular among customers. Digital wearable devices, which pack the power of smartphones, are making it increasingly feasible for banks to offer targeted services to customers.

B. FinTech Companies:

Many banks are seeking to exploit the opportunities presented by digital, either by leveraging the technologies in-house or by partnering with FinTech companies. Initially, these companies were seen as competitors taking advantage of the void that was created by the BFS industry’s inability to keep up with technological breakthroughs. However, today, Bank-FinTech partnerships are increasingly the norm, with the latter providing marketing, administration, loan servicing or other services enabling banks to offer tech-enabled banking products.

C. Building a Cognitive Side to the Business:

As new regulatory requirements and data protection laws put additional strains on already-stretched resources, emerging technologies such as AI and Robotic Process Automation are helping banks address these constraints efficiently.

D. Risk: Leveraging technology to elevate risk management:

Regulatory divergence, geopolitical instability, and the possibility of a downturn have created a host of impending risks, requiring financial institutions to rethink traditional approaches to risk management. Additionally, nonfinancial risks remain top of mind for regulators and banks alike and many have begun to sharpen their focus on this emerging subset of risks.

E. Transformation – Key to the Industry’s Future:

To be most effective, banks and financial institutions should re-define themselves as agile technology companies in the financial services industry, not the other way around. This implies that BFS companies should shed their non-core operations, retaining only those businesses that provide true differentiation for customers.

To summarize, as banks continue to cope with the developments that have already made an impact, their ability to transform themselves with speed and agility, and their future strategies to survive the next revolution, will determine the winners and losers in this increasingly digital world.  

IFMR GSB MBA-Internship Stories | Sumit Jha

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IFMR GSB MBA-Internship Stories | Sumit Jha

IFMR GSB MBA-Internship Stories are a series of interviews with the students of IFMR GSB, who have recently completed their Summer Internships. Here, Sumit Jha, MBA 2021 shares his internship experience and learnings at Credit Suisse.

Could you tell us about the organization you have completed/are doing your internship from?

Credit Suisse is a global wealth manager, investment bank and financial services company founded and based in Switzerland. It mainly focuses on global markets. 

Did you focus on a specific domain while participating in summer placements? How did you approach the whole process? 

Yes, I was focused on Risk Management.  Before the placement season, I spoke to seniors within the MBA programme and did ample research on the roles offered by Credit Suisse.

Now that the internship has successfully concluded, could you reflect on your experience through the same?

From a learning perspective, the experience was great. I was able to gain deep practical understanding of risk management practices.

How was the environment of the company, the resources, employees and work culture?

The employees were friendly, helpful and approachable. The resources were great, from learning tools to hardware.

What were the key challenges you faced during your internship and how did you overcome them?

Getting appointments for meeting slots with senior stakeholders was challenging as their schedules were always packed. Though continuous follow up and reaching out to them over the phone eventually helped.

How about the learnings you garnered from this internship? Are there any milestones you would like to share?

The skills I learnt at Credit Suisse has helped me develop a practical understanding to complement the theoretical knowledge I will be acquiring in my MBA programme. I completed my deliverables before the assigned deadline and that was a definite milestone.

Do you think it’s important for an MBA student to do an internship? What values/skills can a student gain from a summer placement?

Yes, it is important. Practical understanding of concepts can help align your career, provide information related to upskilling and importantly tell you whether you should work in this domain or a change is required. It also helps decide, which subjects you should study in your final year or which stream to choose, whether generalisation will be suitable or specialisation.

During your internship, how were you connected with your academic mentor(s) at the institute?

I was in constant touch with my mentor over email and phone. The ensuing conversation along with constant support, aided in shaping a  great internship experience. 

Would you prefer to return to the organization for a job opportunity in the future?

Yes, I would definitely want to return to Credit Suisse for a job opportunity.

With due consideration to COVID-19, all internships were moved to the virtual mode- how was that navigating through this new experience?

Even though I missed the in-person experience and the fact that substantial learning during internships comes from shadowing a senior resource which is tough in the virtual mode but given the dire situation, Credit Suisse did the best in the circumstances.

Could you tell us how the remote working experience was, with respect to building team rapport, internal communication and work as a whole?

The entire experience was great, given the security challenges COVID-19 posed. The team was very supportive, internal communications were crystal clear and from a work perspective the experience was helpful as I learned some important practical concepts.

IFMR GSB MBA-Internship Stories | Nandan Sudheer

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IFMR GSB MBA-Internship Stories | Nandan Sudheer

IFMR GSB MBA-Internship Stories are a series of interviews with the students of IFMR GSB, who have recently completed their Summer Internships. Here, Nandan AS, MBA 2021 shares his internship experience and learnings at JPMorgan Chase & Co.

Could you tell us about the organization you have completed/are doing your internship from?

JPMorgan Chase & Co. is an American multinational investment bank and financial services holding company headquartered in New York City. It is the world’s most valuable bank by market capitalization.

Did you focus on a specific domain while participating in summer placements? How did you approach the whole process? 

Being an engineer and having worked in Fintech and Data startups, I was looking for a role where I could use my existing expertise and also learn more from an industry that is new to me. Corporate and Investment Banking is very new to me and the CADP program of JPMorgan Chase & Co. was perfect for my skill sets.

Now that the internship has successfully concluded, could you reflect on your experience through the same?

My internship with JPMorgan Chase & Co. started, when the uncertainty in businesses across the globe was building up. However, none of that affected the work or the interactions between the firm and the interns. We had 3-4 online sessions per week which included learning series, ‘virtually humane’ sessions, sessions on good work and volunteering etc. They always kept us engaged and ensured that we learnt and understood what it meant, to be part of this great organization.

How was the environment of the company, the resources, employees and work culture?

The culture is very welcoming and open. We were encouraged to ask questions about anything relevant to our internships, to our peers in the team, to our manager or the recruitment team and they never left any of them unanswered. Every intern was assigned a buddy, who was previously an intern like us and later got hired by the firm, to help us get our access details and support in any queries we had.

What were the key challenges you faced during your internship and how did you overcome them?

The concept of a completely virtual internship was new to me. Again, the great team, the continuous engagement, and the sessions imparted the constant feeling that we were in real working for a great organization.

How about the learnings you garnered from this internship? Are there any milestones you would like to share?

For someone who is from an Engineering background, this internship increased my interest in finance and financial products which was previously a whole new topic of study for me. I am pretty sure this learning will make a huge impact on my career going forward.

Do you think it’s important for an MBA student to do an internship? What values/skills can a student gain from a summer placement?

Yes. More than the skills, it is the excitement that builds in every student’s mind that drives the second year of MBA forward. To get a hint of what one may achieve in their career after college is a big morale boost, pushing one to perform better and reach the peak of productivity.  

During your internship, how were you connected with your academic mentor(s) at the institute?

My academic mentor for the internship was Prof.Suresh Venkatraman. There was a particular conversation when he explained to me different scenarios in the organizations he previously worked for, and how he used to handle such situations. That learning from real-life experiences is the biggest learning any student can get from his/her academic mentor, and it has done wonders to my internship experience.

Would you prefer to return to the organization for a job opportunity in the future?

Yes, definitely.

With due consideration to COVID-19, all internships were moved to the virtual mode- how was that navigating through this new experience?

As mentioned earlier, the concept of a completely virtual internship was new for me but the organization ensured that it was seamless. Multiple platforms were used in the engagement process.

Could you tell us how the remote working experience was, with respect to building team rapport, internal communication and work as a whole?

We had 3-4 online sessions per week. Fun team activities were also conducted, where interns from different colleges were grouped into different teams and given weekly tasks with a scoreboard. This built a rapport and a sense of healthy competition among the interns, and also helped in forming new friendships.

Could you share a memorable incident from your internship days?

I cannot explain the feeling, the day I got appreciated for my work. For all the hard work we do, the gesture of appreciation is a big achievement and that is the most memorable incident for me, through this internship.

Dr. Gautam Menon Speaks

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Dr. Gautam Menon Speaks

April 11, 2020:…Dr. Gautam Menon interacted with the Krea Community to help comprehend the obscurities of COVID-19 through disease modelling.

“All of us model all the time with what lies around. We attempt predicting situations through mental perspectives. These are mental models.”

Dr. Gautam Menon kick-started an evening which simplified the complexities that surround modelling of infectious diseases. As he navigated through the interaction, he explained the art and science of disease modelling.

Addressing the students, faculty and staff at Krea University, Dr. Menon spoke as a part of VENI- The Ideas Place’s ‘Where Critical Thinking Meets Creativity’ series. The session was hosted by Dr. Akhila Ramnarayan, Divisional Chair of Literature and Arts at Krea and curator of programming at VENI and moderated by Dr.Anand Sahasranaman, Assistant Professor of Mathematics, Division of Sciences, Krea University.

Dr. Menon is currently Professor of Physics and Biology at Ashoka University and Adjunct Professor at Tata Institute of Fundamental Research. He is on leave from the Institute of Mathematical Sciences, Chennai, where he is a Professor in its Theoretical Physics and Computational Biology groups.

Dr. Menon began by introducing us to his work on mathematically modelling infectious diseases, and spoke about how the modelling perspective is enriched at the intersection of disciplines. He recounted his experience in physics and his journey into biology, which he termed would be the science of the 21st century. He stressed on the importance of models in bridging the gap between problems and effective policies. On epidemic models, he held that they helped predict the likely path of an epidemic and hence enabled preparation for any upcoming crisis.

Taking us through an entire gamut of terms and simplifying it for the audience, Dr. Menon explained how what we think of diseases has changed over the years. He then introduced the SIR model originated by Kermack and McKendrick in the 1920s, explaining how the model divides the population into three compartments- Susceptible, Infected and Recovered. Tracing the evolution of the model, he spoke of varied versions of the model guided by the same essential principles, and their usage over time to ask different sets of questions, as is the case with COVID-19. Dr. Menon said that every successive model builds on a previous model and that there were dynamic changes in response to information from the ground, and hence the need for constant recalibration. On being asked about the impact of SIR type models in actually predicting the evolution of a disease, he cited the example of the use of the model in the UK during the Foot and Mouth Disease outbreak, where it helped control the extent of damage. He also introduced the Basic Reproduction Number (R0), which is simply the expected number of infections caused by a single case in a population, and a critical parameter used to understand the spread of diseases.

Reflecting on the old story of the sage who asked the king to give him one grain of rice on the first square of a chessboard, and then double the quantity in every square till all squares were exhausted, he explained the nature of exponential rise in numbers in an infectious disease. COVID-19, with its easy transmissibility even from asymptomatic cases, was proving to be a classic case of exponential growth.

When the discussion turned to the question of data, Dr. Menon said, “Models are only as useful as the data you put into them”, and stressed the need for accurate numbers from the authorities. He discussed the need for testing, identification, isolation, concentration on hotspots, and need for robust healthcare systems in the context of flattening the curve in India, and emphasised that while the current lockdown is important, it is optimally useful when backed with resourceful testing.

Click here to watch the full session

Bibendum cursus

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