"India cannot continue to stay under lockdown as more people will die from hunger": Narayana Murthy

Well, there are a few significant factors that are different about this particular crisis. First of all, coronavirus can exist in an instance asymptomatically. In other words, people who carry the virus may not exhibit any signs of being afflicted. That makes the task extremely difficult. The second thing is, we in India, we have a huge population. We are not equipped to test. Let me give you a piece of data: even if we were to ramp up testing to one lakh a day, it will take 37 years for all Indians to be tested. And by that time, the population would have grown by another 700 million or something. In other words, we will never catch up with tests. Further, there is no vaccine in sight. These three things have made this a crisis.

Well, I am an optimist and I believe that even this crisis, too, will pass. We will come out slowly. But before I go further talking about the impact of the virus on the Indian economy, I want to make a point. You know, if you look at the number of deaths due to coronavirus in India, it is 0.25 to 0.5 percent of the deaths in the developed countries. Second, India has a mortality rate of 0.7%. In other words, every year about 90-plus lakhs of people die due to various reasons, of which 2.3 million people die due to pollution because India is the most polluted place in the world. Now, when you look at 90 lakhs or 9 million people dying naturally and when you compare it with the death of 1,000 people in the last two months, obviously this is not as much of a panic as we all think it is. There are bigger causes that are causing bigger numbers. Now, let me come quickly to the impact of COVID-19 on the Indian economy. First of all, we have about 52.5 crore people employed in the country. Agriculture contributes about 17% of our GDP and about 40% of the labor force is employed in agriculture. Manufacturing contributes about 27.4% of our GDP and it employs about 25.4% of our labor force. Services contributes about 55% of our GDP and it employs approximately 32% of the labor force. Now, what that means is about 22.5 crore people are employed in agriculture, about 30 crore people are employed in manufacturing and services. Of these, important 11 crore are employed by the organized sector, private sector, and the public sector and the government. Of this, 50% of the people are on contract in every organization, whether it is Infosys, Economic Times, etc. 50% of the lower-level employees are on contract and therefore they are vulnerable to quickly change. The remaining 19 crore people, when you take away 11 crore employed, the informal and unorganized sector, they are self-employed. A significant part of this population is likely to have lost its livelihood and will definitely do so if this crisis continues for long. Of course, agriculture has not been affected as much by the pandemic because social distancing is easier there and the pandemic has not entered rural India. The government has lots of schemes to take care of them. Second, several sectors of the economy are severely affected, you know, the airlines, retail, movie industry, restaurants, hospitality. I think they will take a couple of years to recover and they will incur a huge loss. Third, most businesses have lost between 15% and 20% of their revenue. Simple, you know, two months: two months is 1/6 of a year, so 1/6 of 100% is about 16.67%. So 15% is very, very normal and easy to understand. What that also means is the taxes and GST collection will be impacted significantly. As you mentioned, the IMF has already estimated the GDP growth rate of India to slow down to 1.9% this year from 4.5% last year. So these are some serious impacts of the COVID-19 crisis.

No, I wouldn't say it's too high a price. However, what is important for us to understand is that India cannot continue in this situation for too long, because at some point of time, deaths due to hunger will outweigh deaths due to Corona. Fortunately, for some really strange reason, maybe it is our genes, maybe it is because we all took BCG vaccination when we were children, maybe the weather here is conducive to suppressing Corona, I do not know what it is, but the deaths being 0.25 to 0.5 percent of the global death is a blessing in disguise for India. But it is a little difficult if we continue to be in lockdown, then the deaths due to hunger, malnutrition inconvenience will increase. You see, I was talking to a taxi driver yesterday, came to the front of our house, and he said, 'Sir, the problem I have is I have to go to this place to get food, and usually I have my food prepared at home, but this time I have to walk such a long distance. That's not the way you can run life, they have to do this every day.' Therefore, I believe that it is extremely important for us to accept the new normal as the situation we are in, with the coronavirus being part of our lives. So we need to create a graph that shows age on X-axis and deaths on Y-axis, and then understand which age group is most vulnerable, and provide some kind of safety to them. And the rest of the workforce must use gowns, must use gloves, must use shields, must use whatever else, take care and go to the factory. For example, in the manufacturing sector, you can't work from home. You cannot. In the agricultural sector, you can from home, but it's a very small part of our economy, which is the IT sector, financial sector, etc., that we can think of working from home. But if you are running a retail shop, you have to be in person. So my personal view is that we Indians have to accept the coronavirus as part of our lives. So we have to say, those of us people of my age who are highly vulnerable to Corona death, we should be very, very careful, and we should perhaps work from home if possible. But if it is possible for the young to go to the office, all of us have big offices, so social distancing is not a big issue. On the other hand, the younger people will probably have to use a certain array, and in the factories, using the same people or even companies using the same people can run three-shift operations. If they are generally running one shift, the moment you start running three shifts, you reduce the number of people by a factor of two-thirds. Then social distancing is possible, and you can commute to the office through this pre-shift operation. So in other words, I urge people to accept this as the new normal, work using three shifts, work based on age distribution to minimize the impact.

You know, I am somewhat surprised that I have not seen any Indian entrepreneurs come up with a finger-pricking testing mechanism, like China had already done, which is testing for antibodies. But testing antibodies is better than not testing at all. If we have a finger-prick testing mechanism in each home, and if it is sold at a reasonable price, most of all the population will go for it. But for some reason, we have not seen a single Indian entrepreneur come out with this. On the other hand, even though the virus may have started in China in December, by January they were ready with the finger-prick antibody testing. That is something that we have to learn. So this is what I am somewhat surprised about. And if we can do that, I think it will be a big tribute to our scientific knowledge, our institutes of higher learning in science and technology, our IITs, IISc, etc. That's what I would say definitely.

I'll tell you, for example, we should have conducted an experiment of running three shifts in a factory that operates on one shift. For example, we could have conducted an experiment where shops, retail shops which run only one shift, to run three shifts. We have not conducted that. Number two, we could have had some entrepreneur who would have produced millions of protective gowns, gloves, goggles, etc. We could have conducted a controlled experiment of using those in factories so that we could have observed the impact of that on contracting the virus. That again we have not done. This was the work that our entrepreneurs could have done. All that we are saying is that we have taken some draconian steps. I understand that the innovation part of our psyche has been lying dormant in the last two months.

Well, I think as I pointed out, since we don't know when the vaccine will be available, whether it is 12 months, 18 months, whatever it is, and whether that vaccine will be operating for the Indian blood, it may be okay for the Caucasian blood, we don't know because those are the guys who are doing all the research, we are not doing much. Therefore, if it doesn't work for the Indian blood, we don't know, it may be five years. So the best thing for us is to accept coronavirus as part of the new normal, think of mechanisms where we can succeed despite this coronavirus problem, ensure that our work productivity does not go down, and we can still have GDP growth possible. I would say that that is a constructive approach that we have to take in this hour of huge crisis.

I personally see that all IT spending which is discretionary will probably be suspended, because in our markets, which happen to be US about sixty to sixty-five percent, and Europe about twenty to twenty-three percent, there is considerable lockdown. Therefore, because the revenues will go down, their profits will go down, they may say that all desirable and discretionary expenses, let us postpone. However, whatever expenses, whatever investments in IT that reduce the cost of operation will allow those companies to operate in the new normal, which is social distancing, virtual commerce, e-commerce, etc. I think those areas are likely to see a significant increase. I wouldn't be surprised if those opportunities increase by twenty to thirty percent, because they are very much needed. But the reality is, every one of them has its cost of offering. See, what happens when you are in a crisis, when your revenues are not growing, when your earnings are depressing? At the same time, you have to make the enterprise-wide transformation.

You know, when we were hit by the dot-com bust in 2001, that time I asked my planning group to use mathematics, statistics, modeling, and simulation, and come out with the worst case, the average case, and the best case. And of course, given our principle of under-promise over-deliver, I said we will grow 30%, but we actually ended up growing 100%. But anyway, that's another day. So what I would tell entrepreneurs: make this analysis – worst case, average case, and best case. Ideally, keep your cost for the worst case or at best the average case. Enhance your work hours to ten hours a day from eight hours, and work six days a week. Once we start operating in the new normal, once we take care of the virus spreading, then you will be in a position to overcome this. That's exactly what we did in 2001. We started working harder, we started reducing our expenses, and the result was we grew by 100%, and that year our net income margin was 31.5%. But anyway, that's for another day. So I would request the entrepreneurs to focus on creating models, then assume either the worst case or the average case at best, cut down all your expenses for the worst or the average case, and then improve work productivity by working 25% more hours per day and perhaps six days a week. I am very confident that they can overcome this.

Well, absolutely, because we have realized the importance of the agricultural sector, importance of food. I think essential foods form probably about 15% of our expenses. Therefore, all the essential goods are available, all these provision shops are available, nobody prevents those shops from being open, and people are allowed transportation of the raw materials for food items from place A to place B, that's all happening. And of course, the government has put in a lot of money in supporting the DBT, the direct benefit transfer mechanism for the rural sector very well. So it's not satisfactory when you look at it from the perspective of a more developed country, but from the perspective of a country like India, it probably works. However, the big problem we have is that somehow we have not been able to look at the daily wage workers in our cities and urban areas. We have not looked at small shops, we have not looked at self-employed people, we have not looked at startups, etc. So what I personally would like to see is, in some way like it has happened in some countries in Europe, if the government can provide interest-free loans to startups as well as compensation to these daily wage workers to the extent of 80% of their earnings for the next six months or something like that, I do think that we would probably be in a slightly better position. And parallelly, on the side of the companies, we have to simply assume that the new normal is one way which proves that COVID-19 is part of our life, and therefore we will succeed despite COVID-19, and we will reduce the impact of COVID-19 while ensuring that our work productivity does not go down, that our GDP growth does not break. That is the philosophy that I am advocating.

I think an institution like NASSCOM should conduct a controlled experiment where, by using suitable protective coverage, workers actually go to the office. And at the end of the successful experiment, we could go to the government and say that it is okay to have people go to the office. Now, it is true that in some cases the productivity of working from home is higher than productivity in the office. Some people have told me that. But my own experience in Infosys was that productivity in the office itself was very low. In 2006, I can tell you, only 60% of the people were coming to the office for six hours. 60% of people are coming to the office for less than three hours! And I conducted another experiment in 2013 and we found that people who came to the office were working only for 40% of their time. So I am not very certain. I do not have data to prove that working from home will improve productivity. So therefore, the better thing also psychologically is to go to the office. So protective gears are important – gowns, goggles, gloves, masks, purity – to bring an air of normalcy in our lives. But that can only be done by an institution like NASSCOM by conducting a controlled experiment with all the industries and take the data to the government and show that it can be done.