Can we Conquer the Coronavirus Cataclysm?

While the spread of the coronavirus and its impact on health can be attributed to a global lifestyle involving the movement of people globally, its impact on the economy is largely due to an imbalanced dependence on China. Some sectors of the Indian industry too will bear the brunt of such dependence, which we should endeavour to avoid..

The word ‘Coronavirus’ is on every-body’s lips. At the time of writing this column, it has already invaded 95 countries. More than 3600 people have died due to this virus, while more than 1,20,000 people are seriously infected and are in isolation wards. The epicentre of the Coronavirus was the Chinese city of Wuhan and in just two months since its detection in the last week of December 2019, it spread like wildfire. The major casualties have been in China, but people in large numbers are also dying in Italy and Iran. Reports of deaths are also coming from the USA, Japan, Korea and many other countries. The confirmed number of infected people is increasing every day. The spread of the virus is due to foreign travel and coming into contact with infected people from China, Italy, Iran and elsewhere.

Fast spreading

The Government of India thrice evacuated its citizens from Wuhan, many of whom were students. A similar demand for evacuation is now coming from Iran, where many Kashmiri students are stuck. So far there is no medicine or vaccine to fight this virus. However, one good thing noticed so far is that the mortality rate is only about 3%. The only danger is that it spreads too fast. The disease is manifested by cough, sneezing, fever, headache, body pain and it ends up in a state akin to pneumonia. The World Health Organization (WHO) and pharma companies of repute are seized with the matter and are working to come up with a drug to kill this virus and to stop its wanton spread.

‘China is the king of the supply chain and when the king is sick, the chain goes down in a spiral. China is also the world’s manufacturing hub, and many international companies have factories there which manufacture the required components, and that has suffered a big hit too’

Supply chain king is sick

Health is always an important issue for people in all countries. Coronavirus has sent the world into a panic mode due to its health hazards. The panic in the world is also due to the effect on the economic front which is as big as or even bigger than the financial crisis of 2008. Stock markets the world over have tanked. Our own Sensex has witnessed the biggest single day fall of more than 2000 points. The cumulative fall in the Sensex over five sessions at the time of writing this column has been about 4000 points. Exports are hit. The international oil price has been a big casualty. The world supply chain of goods has been very badly hit. China is the king of the supply chain and when the king is sick, the chain goes down into a spiral. China is also the world’s manufacturing hub, and many international companies have factories there which manufacture the required components, and that has suffered a big hit too.

Many sectors of the Indian economy which are dependent upon imports from China are badly hit and these include the pharma and electronics sectors. Raw materials for our drug manufacturing units come from China and if there is a problem in China, then it can affect our pharmaceutical industry. Medicines like paracetamol, antibiotics and drugs for diabetics are already in short supply due to the Coronavirus affected China.

The world has witnessed several dreaded infectious diseases in the past, but these were confined to a few geographical pockets only. These diseases, in many cases, had higher mortality rates than Coronavirus, but since their spread was not as fast, they did not create panic as is seen today.

There is a point of view that the fast spread of Covid-19 is associated with rapid globalisation in recent years. As trade and business are becoming global, so are diseases. Coronavirus is a testimony of the globalisation of disease. However, globalisation of business cannot be equated with the globalisation of a disease, though the former may be the cause for the globalisation of the latter by pushing its faster spread. The globalisation of a business is decided by the active participation of countries as the countries play the role of facilitators for the movement of business from one country to another. On the contrary, a globalised disease moves on its own without discriminating between the borders of the countries. The globalisation of a disease can at least be seen as a side effect of the globalisation of business. In the globalised business world, goods, services and workforce move rapidly from one country to an-other and in the process, they work as free and comfortable carriers of virus like Covid-19. The globalised disease is really socialist, as it does not distinguish between a rich and a poor country. For it, a king and a beggar are on the same pedestal. It moves without levy of any tariff by any country on its borders.

Not truly global

In the background of the globalisation of disease, there may be a view that it is not good to have globalised trade. Even before a globalised Coronavirus, we have been seeing actions taken by countries that went against the spirit of globalisation. The globalisation of trade is based upon the cardinal principle of mutuality between countries, but what we have been hearing of late is about the trade war between the US and China. Today we see the WTO losing significance and individual interest of countries getting more pronounced than global interest.

The sane view should be that Coronavirus is an evil and so also any globalised disease, but it should not mean that a globalised economy is bad. Globalisation is good for the world and even for each country. The effects of Coronavirus should be seen as an occupational hazard and not beyond that. We should at best see this as a ‘butterfly effect’ of Lorenz in the ‘Chaos Theory’ when the flapping of wings by a butterfly was seen as the cause of a hurricane. Hurricanes will keep coming whether butterflies are around or not and similarly, globalisation of business will move on, despite diseases.

Correct the mistakes

Coronavirus is bad, but it also gives us opportunities to correct the prevailing mistakes. The world as a whole has to introspect as to why a medical problem has seriously affected the global economy. The essence of globalisation of trade has been that it should be on a moving gear from one corner of the world to another and that it should not remain stuck in just a few pockets. In such a situation, a setback due to some extra-neous factors like a disease should not paralyse global business.

‘Coronavirus has sent the world into a panic mode due to its health hazards. The panic in the world is also due to the effect on the economic front which is as a big or even bigger than the financial crisis of 2008’

Today, global business is in panic and the World Bank and IMF are forecasting that there will be a fall in global GDP because of Coronavirus. It is true that Coronavirus is spreading, but the adverse effect on the world economy is mainly due to the fact that China has been the worst hit. China says that now it is controlled as there is a fall in new cases of Coronavirus. But knowing China, very few people believe its statistics. The impact of China on the world economy is not only because of the fact that it is the second biggest world economy but because of the fact that despite the globalisation of more than three decades, China has emerged as the biggest player in the supply chain of goods. This skewed concentration of power in one country has seriously affected global trade, when this power centre itself is seriously affected by a pandemic. Had there been the globalisation of trade in the true sense, then such a situation would not have emerged as there would have been numerous big players in the supply chain as against the monopoly of China we see at present. It is high time countries tried hard to become significant players in the supply chain of global trade and thus remove the skeweness, which is presently in favour of China.

In the Indian context too, we have to learn a lot. Medical solutions will take care of the medical problem, hopefully, new drugs and vaccine will come soon to fight Coronavirus and such other diseases in the future. But we urgently require to think over the mechanics of business prevalent in India.

Multiple sources

India, though being one of the biggest markets of the world, it appears that we do not produce some important items for our own use. There is nothing wrong in importing things for our manufacturing process or for self consumption, but it is definitely not correct to solely depend upon the import of some manufactured goods like raw materials for our pharmaceuticals from only one country like China, which is also not a very friendly country. The import of natural resources which our country does not produce or produces less then what is required cannot be faulted, but why depend solely on one country for manufactured goods that we can manufacture ourselves? Even in an adverse situation where we lag behind in technology to produce some products, the ideal situation would have been to import these products from more than one country.

Today, important products like drugs are hit, as our pharma companies import the basic raw material only from China. A similar situation has arisen in the case of many other products and we are experiencing the pain, post Coronavirus. The government and industries must review and take suitable decisions so that we do not get stuck in similar situations in the future. We have to proceed looking at the present challenge as an opportunity to correct ourselves. We also should try our best to emerge as a big player in the global supply chain.