Onerous market conditions are forcing big changes in business practices. More important, the consumer’s behaviour too is changing for the better. Unlike demonetization in November 2016, which was a short-term blip, the crisis from the novel coronavirus will carry forward with long-term changes.The construction industry for one is undergoing a major shift to prefabricated technology and away from the traditional brick and mortar route.
Prefab was used for large affordable housing projects initially, but now the changeover is quick as the lockdown in different parts of the country has made movement of materials and workmen logistically difficult. Like putting a jigsaw puzzle together, prefabricated structures are constructed by casting at central hubs entire building parts – floor slabs, columns and large sheer walls – and then transported to the construction sites to be put together. Though believed to be 20 per cent more expensive, there is net saving as speed of construction is 25-30 per cent faster with half the requirement of manpower on construction sites.
A 400-bed hospital for instance is currently being built at Kasargod, in Kerala, by Tata Projects Ltd using prefabricated structures made in Jamshedpur, and then shipped by road to the Kerala site. For those who use these structures, it will be a new cultural experience as there is no plaster on the smooth precast walls. At the construction sites, workers will need a higher skill set as they slot together giant
columns and slabs using cameras and internet-enabled hand devices. One envisages, few construction groups will go back to the messy, old brick-and-mortar systems.
There are, of course, those who quickly shifted to cater to immediate demands – pharmaceutical and FMCG units that focused on sanitizers and textile units that cashed in on the demand for PPE suits. This may dry up but the big textile brands have realized that the virus is here to stay, and have therefore reworked their priorities to include fabric that is antiviral and anti-microbial. This assumes that on traditional textile surfaces, certain viruses can survive up to two days.
Seeing this niche, most textile big brands have announced ‘anti-virus’ clothing and luxury wear. Peter England, an Aditya Birla menswear brand, has tied up with a Swiss-based HeiQ to launch fashionable workwear and even masks at pocket-pinching prices. Siyaram, another big menswear brand, has collaborated with Australian company Health-Guard to develop what it claims is an anti-coronavirus fabric.
But it’s in the way we handle cash, that is seeing a definitive shift. In the last quarter of calendar 2019, a significant milestone was achieved when the total value of card and mobile payments at Rs 10.57 lakh crore for the first time exceeded ATM withdrawals which were at Rs 9.12 lakh crore. This gap has further expanded now.
A variety of reasons has speeded up the switchover from cash to digital transfers. The fear of the virus sitting on physical money, and the reduction of face-to-face contact during lockdown, has helped the growth of digital money. The Reserve Bank (RBI) estimates that digital transactions will jump to 1.5 billion transactions valued at Rs 15 lakh crore a day by 2025 from the current level of about 100 million transactions worth Rs 5 lakh crore a day. The current levels again are about 5 times the volume witnessed in June 2016.
One of the important reasons cited for the not-so-successful demonetization move of November 2016, when high denomination notes of Rs 500 and Rs 1,000 were scrapped, was the government’s intent to make India a digital economy. Initially, there was rapid progress, as people without cash were forced to opt for digital modes; however, after 6 to 9 months, cash became king again. When 85-90 per cent of our workforce is in casual employment, and there is little availability of digital credit, cash rules.
Post demonetization, circulation of currency notes grew rapidly despite the government’s counter-claims. From Rs 17.47 lakh crore of notes in circulation on November 4, 2016, the figure had surged to Rs 21.71 lakh crore by May 31, 2019. Current conditions though are once again in favour of digital options. The most recent Payments Council of India (PCI) and PwC report estimates that India will contribute 2.2 per cent to the world’s digital market by 2023.
Interestingly, the ‘home-grown’ digital payments infrastructure including Unified Payments Interface (UPI), Bharat QR and mobile wallets have captured the pockets of small merchants, and even hawkers and street sellers. In volume, it is estimated that there will be 59 million transactions by 2023 and that “UPI has witnessed a compounded annual growth rate (CAGR) of 785 per cent in volume and 570 per cent in value from FY2017 to FY 2020.
When a small nursery owner in Raigad district, off Mumbai, insisted he be paid for plants and shrubs not in cash but a Google Pay transfer, then indeed the digital age has arrived.