NEW DELHI: We are close to completing two months of the ongoing nationwide lockdown, instigated by the fatal global pandemic COVID2019, living through extraordinary times, adjusting to newer ways of working, and dealing with newer ways of living. Many businesses have faced unimaginable loss, with giants like Ola, Uber, Swiggy, amongst others, laying off employees in mass numbers, and brands like Cream Bell shutting down. Small-scale businesses, be it brands running the shop on Instagram, or independent agencies, everyone has faced dire consequences.

Amidst all this, the Indian government announced the fourth phase of the lockdown a few days back, with a lot of relaxations (depending on a state-to-state basis), and also introduced an economic stimulus package to help the businesses, especially the MSMEs, getting back on their feet, laying a foundation for ‘Aatmnirbhar Bharat’ (self-reliant India).

The advertising industry’s reaction to these announcements has been lukewarm. While most of them seem to be content with the new lockdown guidelines, they had higher expectations with the economic stimulus than served.

Reacting to the new lockdown guidelines, Havas Group CEO Rana Barua noted that it is very early to comment “as there are way too many mixed reactions from the industry. So, we will have to wait for a few more weeks to understand the implications.”

FCB India group chairman and CEO Rohit Ohri said, “India is a densely populated country and it is wiser to remove the lockdown in a phased manner. The government, I feel, is doing a great job at it.”

Madison Media chief analytics officer Nagaraj Krishnamurthy also lauded the government intervention in the matter. “The new lockdown guidelines try to balance life and livelihood. State governments have been given more power to decide on implementation.  This is a welcome step as local government will be a lot more informed on the ground reality. Ideally, we may have wanted all restrictions removed so that crowd immunity gets developed. However, such a broad stroke easing of restrictions may not be practically possible.”

Dentsu One president Harjot Singh Narang feels that the current situation is much like watching a cricket match as things are happening in real-time and everyone is reacting according to the evolving situations in ways they think is the best.

He said, “(The steps) are being subjected to a billion viewers with multibillion views on what is being done and what more could be done differently. I strongly feel that at times of crisis like this, we need to let the frontline response team do its work and do our best to help them in any way possible. There will always be views (personal and public) on what more could be done for the economy, the migrant, the underprivileged, etc…. but for now I feel we are clearly looking to open up slowly and cautiously. Is it “too cautious” or “too early”, that only time will tell.”

The new economic stimulus, while great for the businesses, doesn’t hold much ground when it comes to helping to deal with the demand-side problems that India has been facing.

While Barua preferred to reserve his comments on the economic package for the time being, Krishnamurthy noted, “There have been very good announcements with regard to reforms. The government has used a crisis to unleash difficult reforms in holy cow sectors like agriculture and defence. Rural demand which was subdued will now improve. This will lead to lagged uplift in demand. However, in the strict meaning of stimulus which is a capital infusion, it is a tad disappointing. There is no sector-specific monetary stimulus for very badly hit sectors like retail, media, hospitality etc.”

He added that it is very much possible that the government will come up with one more round of monetary stimulus once the lockdown ends and people get back to work. “A true picture of demand will then emerge and the government can intervene to ease the pain faced by badly impacted sectors.”

Narang agreed to Krishnamurthy that the stimulus will help the business but there is a 50:50 chance of demands improving early. “If I try to put myself in the decision maker’s shoes - as of now the thinking behind the stimulus package seems to be - over-index and create more liquidity for businesses so they can pass it on to people as wages, profits etc, and that should increase demand overall. Additionally, push in big-ticket reforms to oil the business machinery and enable it to run faster and better thereby attracting large foreign businesses to set up production facilities in our country and keep the wheels of growth turning.”

“Sounds good in theory but the problem is that any thinking on supply-led growth is bound to take a long time as the economic multiplier kicks in and gets demand grows. Given the suffering around us and the sentiment that has fallen sharply ever since 2019 and now the complete nosedive of 2020, this time span could be even longer. This situation could jeopardise the whole theoretical possibility of it working. However, if the reforms kick in quickly and we do get to become a producer-led economy for large business investments, then even though we will go through a painful period for some time the recovery could be more robust and sustainable than a simple consumption-led growth model that we seem to have until 2018.” he added.

Both Narang and Ohri said that it would have been better if the government had put money directly in consumer’s hands.

Ohri suggested relief in taxes to support the dwindling spending power. Narang said, “I would look to put money in people’s hands directly as much as possible through tax reductions and direct transfers to the underprivileged but am not sure on how much the current coffers of the government could support this and how much of it could become just a short-term measure to alleviate pain without a mid- to long-term strategy to kick in long-term restructuring and growth that truly reduces inequality all around.”