A few industries continue to earn money during the lockdown even if they are not giving full service. Oh yes it is the BFSI industry. You continue to pay interest on your loans, the management charges on your assets, the insurance premium – do remember the services are being rendered to you during the Lockdown.

Hence it is perhaps difficult for people from these industries to understand the impact of the Lockdown on most other industries. Most friends in industries like steel, paints, hardware, textiles – I mean small businessmen earning about Rs. 2-3 crores a year, HAVE ALL sounded worried about their business. Not sure if Namo and team have understood the impact of this lockdown (I am not arguing for or against it in this post).

Easy for a politician to come on TV and say “please do not sack anybody and pay salaries in full”. Ask the small brokerage houses. Ask the small IFA. Ask the small service providers – including say computer servicing guy, the ac servicing guy – their income is NIL, they will NOT be able to pay salaries. Easy for upper class (like me!!) to say “I will pay¬† salary to my domestic help, but hey I do not have any other permanent employee). How will a friend whose monthly revenue of Rs. 10 crores – has dropped by Rs, 7 crores – pay salaries? Something is wrong with our govt to think “emotionally” – hey guys you need to think “operationally” or in terms of “cash-flow”.

All my friends who are running a business will be compensating all their employees, but will they pay full salary for the next quarter I do not know. Yes Government of India has a Consolidated Fund of India from where our state governments, central gov, municipalities, IIT, IIM, government run hospitals,….will all draw money, but what happens to the private sector? Who will fund Apollo Hospital’s salary bill? Doctors have had to shut down most of the optional work – including dentistry.

There is a lot of pain ahead, and I guess one of the things that is going to hit the asset gathering industry is the falling amount of assets under management. Expect to see some withdrawals and some fall in SIP. In the medical fraternity I (and a few others) are all ready seeing a fall in the SIP committment. When a doctor does a SIP it is nice big amounts – depending on their age. So a Rs. 5L sip is not unheard of for a senior doc, in fact there are doctors (owner docs lets say) who do bigger amounts. I expect a lot of shrinkage in this. I expect to see a shrinkage of SIP of almost all businessmen, many professionals, senior executives….hey that says it all does it not?

In 2008/9 the fall was followed by a quick recovery. This pandemic is hurting everybody, everywhere – what impact it will have on you, YOU, alone will be able to say.

All the best.

PS: I do not know, but I do not think that the worst fall in the market is behind us. The slow grind of 3 years from 32000 to 42000 could be far more painful. Do not forget that Nagasaki and Hiroshima were destroyed in minutes, it took about 50 years to be rebuilt.

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