Raghuram Rajan, Former Governor, RBI in conversation with CNBC-TV18

Q: How do you explain this – markets in the US rising to new highs and even in India, even if it’s an underperforming market, doing better and better every day of July, although the macro economy, the GDP numbers are getting revised lower and lower. How is this possible?

A: There has been so much intervention, and certainly that’s true in the United States, much less true in the emerging markets, so much intervention both in terms of fiscal intervention which has kept income level especially for the low income people at maybe on par or even higher than what they were earning earlier, but also there is a massive amount of financial market support to all kinds of entities and rates have been kept low forever. So given that rates are needed to discount stock prices, maybe that’s keeping stock prices buoyant because we are discounting with a very low rate.

But even that, you would think that a couple of years of low earnings are going to depress stock prices and that means few other possibilities that I can think of -- one is that the sectors that are represented in the stock market are going to do better than the sectors that are not. For example, industrial firms will recover faster, but also within industrial firms if their small competitors are knocked out, the firms that are traded on the market may do better. For example HDFC is going to do well because if other firms in the banking sector are held back by poor performance, HDFC has more space to benefit.

Lastly, this is when all else fails, you have to say there is some amount of irrational exuberance. I think some of these put together could explain what is going on.

Q: But can this end badly? One big reason obviously is that the global central banks are printing a lot of currency and that spills over into emerging markets as well. Of course, even Indian and other emerging market central banks have kept liquidity plentiful. So is this an equity inflation, an asset inflation and can it end badly?

A: It obviously depends on what is driving it. There is a certain amount of money as you said of liquidity chasing asset prices, there is a certain amount of fear of missing out -- there are small retail investors who think that things are going to be fine and they will join in especially if the market has already bounced back quite a bit and that could take the market even higher only to correct down the line.

Now I think at this point it’s probably a fool’s game trying to decide how much of what is responsible for the prices, but from an investor’s perspective what is most important is to be well diversified -- not to put all your eggs in one basket, to have your money properly distributed in different baskets -- some domestic, some international, some in fixed income, some in the stock market. Don’t go chasing after one particular sector.

Q: If you have to advise on how India should design macroeconomic policy, what would that be?

A: First I would say we got to get our medical policy right. I understand the enormous efforts that is going, I understand the brave people who are on the frontlines, but now we are the third largest number of cases and no matter how you spin it, it is true that poor countries, developing countries with the large rural area have had relatively low deaths. India is not an exception in that, in fact the World Bank has a paper suggesting this is a puzzle – why is it that the deaths per million is so much lower amongst emerging markets and developing countries? So that is a beneficial thing.

But the number of cases is increasing and until we contain it, it is going to be very hard to open up. Your program just had some vignettes about what is happening in Tamil Nadu; if you have to keep closing down, it creates a lot of uncertainty for business, but also business gets stuck at a moderate level. So there is no second guessing the fact that we need to contain the virus, bend the curve.

We haven’t bent the curve -- I see some statements about yes we have bent the curve, but we haven’t. We need to bring the number of cases down on a reliable basis, until we do that, we cannot rest. We have to bring it down to a low number so that we can actually start testing, tracking and containing it.

Q: When we have to do that then we probably have to lockdown, then we are losing lives to poverty, to hunger?

A: I am not suggesting we do a massive lockdown again, I think we need to understand, we need to look around the world, especially the emerging and developing world, what has worked there, why has Ethiopia got a low number of cases, why did Vietnam work and figure out from that what seems reasonable responses in order to bring the virus down significantly from where we are.

Clearly, a massive amount of education is involved, clearly a massive amount of additional sort of medical equipment etc. is involved, but until we fix that, it is not clear to me that we will make progress on the economic front more than a certain amount. I am, again, not an expert on epidemiology, but it seems to me that there are lessons we can learn from what is happening around the world and we don’t necessarily need to look to the West only for lessons.

Q: But what next - I mean yes of course that is the health imperative, but what should the government do for the economy? Is therea large amount of fiscal stimulus spending that they ought to do, how do they ought to finance it?

A: During this process of waiting to deal with the virus, we should be preparing for the next phase, right. Certainly, I would say that a repair of our companies is extremely important, we need to make sure our companies come out from this in a position to actually reopen and grow. They need working capital, some of them need to make investments. We need to make sure they have that ability and that means a couple of things.

One, they shouldn’t be over indebted. So that means looking at their debt log because you have been spending during this time, keeping on your employees etc. and that means you have been taking on debt or at least running down your reserves. So you should have the ability to borrow, but that means you should not be over borrowed already. So restructuring your debts may be on the cards for a number of them and certainly access to finance going forward is really important for a number firms. This is where I think cleaning up the financial sector, making sure they can lend when that is needed, both to the individuals, retail, but also to firms is extremely important.

We should be spending a lot of time on that now. The NCLT should be working 24/7, we should have multiple new offices even though we have put a moratorium on the new cases, clear out the old cases and be prepared for an avalanche of new cases because we need to fix that. We don’t have the money to bail out every small firm like the US has done with Paycheck Protection Program, but we have to make sure that those companies are ready to turn. So that is one example of what we need to do.

But we also need to create impetus for growth. Some of that will come from stimulus spending which means spending on potentially infrastructure, which is going to create construction jobs and is also going to create demand for steel, demand for cement all that which can be revitalizing. Those sort of projects should be in the process of being brought to the front quickly and that means again working on that 24/7 right now.

So, I don’t think we should be waiting and twiddling our thumbs, and I am sure that is not happening, but we should be really preparing for when the economy opens up fully and doing everything we can both in terms of repairing the old damage that is made in the past in the power sector and the financial sector, but also creating sort of stimulus spending.

Lastly, I think the government has talked about reforms. Certainly the reforms in the agriculture sector look promising if they are carried out, but there are other reforms which have been promised, what has happened on that? You said the stock market is buoyant, why aren’t we selling public sector firms at this point? Are we waiting for stock market to come down to start selling more?

We talked about privatization; why haven’t we spent these 4-5 months preparing the entities to be privatized and to sell them so that we can have more resources to spend on repairing the economy. These are the questions we should be asking.

Q: There is one buzz which I do want to check with you; this is only a buzz – Mr. KV Kamath himself said no, he has not been sounded out when we interviewed him a little while back, but do you think that is a good idea to get people like KV Kamath into government?

A: I think getting professionals into government, especially on the economic and financial side, because we really need much more capability there and we need people who can think about macro, we need people who can think about financial sector because we really need a lot of effort to compensate for our more modest resources. We need to do things much more cleverly, much more quickly, on a much bigger plane if we are to come back as an economy. This year looks terrible, all the projects are getting worse, but let us not make next year bad also by failing to take action.

Q: Would you want to pick a number; we started with -1 percent when COVID first started and then a lot of people said -3.5 percent, then it went -5 percent, yesterday Citi put out a report saying -6 percent, and Dr. Pronab Sen whom I really respect the most thinks it could be minus double digit like -10 percent. Do you think the economy can be as bad as that?

A: The reality is nobody knows. Surely it is going to be a contraction, but when you look at some of the mobility numbers, mobility/activity failing very closely, we saw mobility come down after lockdown, we have seen it come back up as we opened up but it is plateauing around 70 percent. That means we are down 30 percent in terms of activity that requires movement.

That is a huge number and for that to be sustained for a few months means we are looking at very low levels of activity. I think it is wrong to be mis-lead by the fact that every activity number that we are going to see over the next few months, looks like double digit levels of growth. That is from a real low and obviously we are going to grow fast from a real low.

But are we going to make up the plunge that took place in the first few months of the lockdown and that is still continuing? That requires much stronger growth for almost the same period and that is why we need much more activity on the economic front. I think people like Mr. Kamath and other professionals recruited in would add capabilities to our current government.

Mark Read on Storyboard with Shibani Gharat on CNBC-TV18

Mark Read in conversation with Shibani Gharat in the show ‘Storyboard’ on CNBC-TV18

Q: Britain has moved further towards easing the lockdown restrictions. What is it like in London currently?

 A: When you go outside in London today, it feels pretty busy actually; it is not quite back to normal, but it is a lot busier than it was 9 or 10 weeks ago when we sent a hundred thousand people around the world to work from home. There is no way in which things are getting back to normal – restaurants are closed, shops are still closed, hairdressers are closed, dentists are closed. So, while people are still going into work, there is no sense that the city is yet back to normal.

Q: Some of the markets that WPP operates in have also started opening up. What is this unlock like for WPP agencies, have employees started going back to work and what are the operational level challenges currently that you guys are facing? Has the operation changed for good? 

A: To answer your last question first, clearly it has been a change for good. It is easier to go into a lockdown, I think we are all finding out, than it is come out of the lockdown. China which is the first country to go into the lockdown has also been the first to come out and you have to commend the Chinese health authorities or Chinese authorities for the rigorous measures they took and the control they got over the virus. 

I did a town hall with our people in Shanghai last week, and while people were wearing masks, you got the sense that things are back to normal. But even in China they are not totally back to normal, offices are probably running at 80 percent occupancy rate at the moment compared to 100 percent pre-COVID.

The sense is that consumer activity is picking up, but I think the confidence does take some time to recover. It is going to take time for confidence to grow and for the various part of the economy as they unlock to have a positive effect on each other. Similarly for the global economy, will we have some markets in lockdown and lot further behind than others -- we need a coordinated economic recovery around the world to get back to where we were at the beginning of the year and that may take 18-24 months unfortunately. 

Q: What are the key learnings from this unlock that can be applied as a model into the other markets as well?

A: I think it has to be voluntary, it has to be gradual. We have to make sure offices are safe, we have to think about how people get into the office, not just when they are in the office. I think there is a spectrum of people – for every person I know that is sort of reluctant to come into the office, there is someone that would be dying to get back in.

Senior executives that live in nice houses and gardens may feel differently from what junior people that probably live in apartments and sometimes with their parents or many other people who are keen to get back into the office. So, I think we have to cater to wide variety of people. 

Q: How much has been the impact of COVID-19 on the revenue already and what is the further impact that you expect on the WPP business in the coming days?

 A: We did see some impact in the first quarter in February and March in China and in March in most other parts of the world. I think we expect that most people the second quarter to be the worst quarter of the year. We need to see gradual recovery in Q3 and Q4 but we still expect negative impact on our revenues over that period. I think that is the unfortunate reality of the situation we have to deal with.

 Q: What has been the strategy of survival so far for WPP and how are you going to apply it in the coming days?

A: Our focus has been on our people and keeping them safe and on our clients. There is a reason to market at the moment, consumers do expect to hear from companies about what they are doing and I think that those companies that are financially strong and can afford to market will benefit disproportionately from their investments and that is certainly something that we are hearing from clients at the moment.

Also, this is the greatest period of innovation perhaps we have ever seen. We have seen a decade’s innovation in eight weeks and so those companies that are understanding in real time the changes in consumer behaviour will be those that benefit. We have also been focusing on communities and places around where we live. In India, we see work from Ogilvy with the government of Mask Force, Wunderman Thompson has done a campaign with Times of India.

We need to think about this in terms of three phases. The first phase is react, the second is recover and the third is renew. The react phase is over, I think people at the moment are focused on how do we think about recovery. But I think what is much more interesting is how they can think about renewing their business, how clients think about how they are going to need to operate in the future. So people have been very resilient through this and have kept busy and have kept talking to clients and to each other. So I think it is too far to call it prospering but I think that people have managed extremely well.

Q: How are you managing costs at WPP?

A: Clearly, with our revenue impact, we needed to take cost action. We are looking at different scenarios for our costs and the first was to stop hiring and limit the pay increase, look at discretionary expenses like travel and award shows that can be quite substantial in our industry. So we worked our way through that.

We have put a number of people on a four day or three day working weeks where it is appropriate and we have also had a number of senior executives, about 3,000 people across the group, take salary sacrifice or pay cuts in the second quarter. We are going to look again at that and see what is appropriate in that area for the rest of the year.  

The last thing we have done is look at permanent head count reduction; we have had to reduce our head count. We are looking at what the likely size of the business is going into next year and making sure that by the end of the year through a mix of turnover and permanent head count reduction, we are in a good place to right size our cost to our revenues base next year.

Q: You have spoken extensively on how important India as a market is for WPP. Can you give us an insight on the kind of work that has come out of India during the COVID time and how has the Indian market fared in terms of business for your organization?

A: India has been impacted, there is a very heavily media driven market, and so there is no way it has escaped this. I mentioned some of the work that we have done for our communities, we have also been working extensively with Hindustan Unilever on their response to the crisis, we have done some very nice work for Mondelez – to say thank you through a chocolate box and a number of creative examples.

I think in India we are seeing much greater demand or much greater television viewing, up 50 percent, but also a lot of growth in the over the top (OTT) services. We have been helping grocers move their business online and hyperlocal delivery systems. So we are helping the whole Indian ecosystem move much more quickly online frankly in the same way we did elsewhere.

I was a little bit nervous when the lockdown happened. I talked to Srinivas, the India Country Manager about sending everybody home, but we did it and we sent people home with equipment and people have continued to work really extremely effectively from their clients. We are very reluctant to make permanent head count reduction in India.  It is a fantastic market for us, it is a great growth market, and we have excellent talent. So as much as we can, we are trying to protect the people that we have in the business.

Q: Tell us what is happening to the marketing budgets globally? Big events are getting cancelled, production of goods and of course production of TV shows, even on OTT platform and television has really stopped. So, where are marketers investing and what is really happening to all those allotted marketing budgets for this year?

A: What we saw in 2008-2009, particularly in newspapers and I know that it is a big category in India that is still resilient, clients cut their spends in newspapers by 40-50 percent. They never went back. I think my concern for free to air broadcasters is, if budget gets cut substantially, will they ever come back in the same way? Particularly the magazine business has been impacted, they have a heavy luxury goods quotient there and those companies are really struggling because of the lockdown and the situation in China and the lack of travel because duty free is big source of demand to them.

We are seeing negative impacts on advertising spend pretty much across the board to a different degree but I do think that those clients – as I said before – who are ready to come back quickly will be those clients that benefit. We have seen in previous downturns of those companies that maintained their investment and by the way in an era of declining trends maintaining investments means typically you increase your share of voice, increasing your share of voice will benefit - marketing is an investment.

The other interesting thing is that I saw the Expedia results where they said that they are not spending a lot of money on search and digital media and that is funny, their brand investments are driving and continue to drive significant traffic to their site. So I think some clients are looking at the continued investment in brand over direct responses as some of them want to continue. So it is really going to be interesting as to how it all plays out in terms of clients’ marketing spend.

Q: I am coming back to your statement that you said earlier how we have witnessed a decade of innovation in the past few weeks, what will it mean for consumer behaviour in the coming days as we step into every step of the unlock that globally we are seeing currently?

A: I defy someone to tell me something that hasn’t changed in the last eight weeks. We are having this debate on a zoom code and someone said what about hair dressing and I pointed out you didn’t get a hair dressing consultation online where professional hair dresser would tell your partner how to cut your hair. So it is hard to think on something like that - all over the UK people are doing online exercise classes, something that you imagine you have to go to a gym to do before, auctions where you need to go to an auction house and now vote online and I think people are learning this new behaviour.

You don’t unlearn things and once you have learnt to do something particularly once you have learnt to do it over three-four-five months and six months, we are not going to go back to the way we did things before. I think some things we will go back to - I hope we go back to restaurants and I hope we go back to going on vacations, I am not sure if we are going to go back to travelling as much, I am not sure if we are going to go back to going into the offices much.

So I think these trends maybe more acute at the moment but I don’t think that they are going away. I cannot think of the last time I used physical currency to pay for something. I have just got used to using my phone to pay for everything in a way I never had done before and retail is going to accepting it. So I think it is going to be a real innovation shift in those companies that had most of the digital and direct channels to communicate and manage their consumers who clearly will be those companies that benefit and everyone else is going to have to catch up.

I think catch up has been in a way the world over the last five years - consumers are ahead of companies in terms of innovation, decades ago, you have talked about the adoption curve in companies with larger technology and consumers would adopt it. Today I think the world has reversed, consumers adopt technology and companies are trying to figure out, how do I reach them now, how do I develop online banking services, how do I make what I want to do. So I think we are going to see all of that innovation.

Now with innovation comes dislocation and disruption and I think that is the worry that we have in an economic impact of recessionary impact of what is going on at the moment as well.

Panel Discussion: Shereen Bhan indulges in a conversation with Rajnish Kumar, Sanjiv Mehta, GV Prasad, Zarin Daruwala, Carmine Di Sibio, Rahul Agarwal, Kunal Shah on CNBC-TV18

Q: I want to understand the feedback that you are getting from your clients on how they see this being different from The Global Financial Crisis of 2009? Of course the obvious one is the medical emergency and the medical crisis and the uncertainty linked to that that we are going to have to deal with, but effectively qualitatively what are CEOs most concerned about today? 

Sibio: This is very different, obviously the situation is different all around the world and so we have regions and countries where the virus is really still on the upswing and India being one of them and then we have places where it is certainly on the downswing and recovery has started like China. So we are getting different inputs from different clients depending on where they are based in the world. But right now, I would say if you look at the US and Europe where our clients are looking to really recover and so forth things have started to open up, people are starting to get back into offices even though it is slow. Obviously, the biggest concern is around health and health of their employees and making sure that there aren't subsequent outbreaks.

Now I think everyone would agree that there is going to be outbreaks when you start opening things up and so therefore there will be setbacks which is why we do think that there will be a recovery, it will be much longer than what we thought of originally, so this concept of v-shaped, u-shaped it is really more going to be like a check mark. We went down and now we are going up, but we are going to have setbacks along the way that is why we are saying it is like a sawtooth. But that will continue, right now there are concerns around making sure that we are getting people back, back in offices safely that is the biggest concern CEOs have. But then also it is where the economy is going and there has been a lot of stimulus in many parts of the world, not everywhere. The stimulus has helped medium-sized businesses and frankly even in the US as much as that has helped it is at a point now where the country has to open up because otherwise there will be more permanent damage to the economies versus temporary damage.

This is very different than the financial crisis which obviously was born out of financial institutions and so forth. For the most part here financial institutions are surviving this pretty well there is a broad-based setback, but it is also a setback that should be temporary and when I say temporary, it could mean six months from now, it could mean even longer. But we will get through this and how we are going to get through this is going to be dependent on medical science and finding a vaccine. As we get through that there are a lot of concerns around how is this going to change everything going forward, everything from working from home to supply chains to globalization those are all things that are going to change going forward.

Q: The vulnerability of India's financial sector and the impact of that on the recovery as we move forward?

Daruwala: I think with the RBI measures of giving six-month moratorium on principal payment I think that is a very good move which has happened because clearly clients will take time before the cash flow start being able to service the interest and principal. So I think this measure has been good, having said that I think we will have to take stock maybe end of August to see whether the recovery is enough for clients to service the interest and principal. Maybe in some sectors which are very deeply affected, I feel like airlines and hotels and realty I think the onetime restructuring window if that is given will really help solve the situation. I think if these measures are done to my mind it will keep the banks in a much more solid financial condition than what was there in the global financial crisis period.

Q: So onetime restructuring is the need of the hour the question is when will the Reserve Bank bring that in- I was asking you about the vulnerability of India's financial sector and link that to the economic recovery. Now you have got from Moody's to other agencies saying that this is going to be a period of high stress for the financial services sector which means that there might be a need for higher recapitalization as well. What will it mean for the economic recovery if this sector itself finds itself struggling and in pain?

Kumar: There is no doubt about it that if the real economy is in trouble then some of it is going to be reflected on the performance of the financial sector, I have no doubt about it. The only thing is that the financial system or the banking system particularly is in a much better position than what it was three years ago, but yes the banks would need capital for both. They would need to support the growth and they would need to build up higher risk capital, so definitely there would be demand for more capital and that is what you would have seen that most of the banks which have declared results they are trying to build up the risk capital by keeping higher provisions and I believe that is the right strategy.

We may not have a problem till say June quarter because of the moratorium given by the Reserve Bank of India, but going forward the impact on the financial sector would depend upon of course upon each banks quality of the portfolio and their exposure and what is the concentration risk which they are carrying in the balance sheet. The banks which are more diversified across the geography and across the sectors and have already built up a good provision coverage ratio for all the accounts; they would be in a much better position to weather the storm. But the position will start becoming clear for all the banks and in general for the economy in the coming months, what we are seeing is the partial exit and partial exit it has its own problems and unless there is a full exit and everything is normal it is very difficult for the all the sectors of the economy to work at the full capacity. But I don't think there is any other alternative also other than the gradual opening up, there is no way that the opening up can happen in one go. We are still seeing that the number of cases, they are on the increase and they are on the rise.

Q: One number from you, is there an estimation that you are working with in terms of what the recapitalization amount could be?

Kumar: We are doing the numbers, it is premature to say now. We are working on scenarios, scenario one, scenario two, scenario three and scenario four, so we are working on all the scenarios.

Q: You haven’t arrived at the number but what is the need today? I would imagine we are in lockdown four at this point in time, restrictions continue across the country and especially in sectors or the states that are the industrial hubs, so at this point in time what you believe the need is likely to be?

Kumar: Immediately there is no need because the reason is that risk weighted assets have come down for the State Bank of India and I am sure that would be the position for everyone. What happens typically in the first quarter there is always a negative growth in the risk weighted assets and it will be for some time that the risk weighted assets growth happens. So ultimately as I said that any capital planning would need to take into account both what would be the risk weighted assets growth and what would be the requirement for keeping higher risk capital or the provisions.

Q: To the point that was being made there by a Mr. Kumar that we have to at this point in time live with this partial reopening, but it poses its own sets of challenges and I know that companies like yours are dealing with them pretty much on a daily basis both at the front end as well as the back end. But you know Sanjiv a lot of, sort of extrapolations are being made on what this means in terms of consumer spending, what it means in terms of consumer behaviour, discretionary spends what is your best estimate at this point in time on what is likely to be the big structural shift if any?

Mehta: First I think there is no option but to start opening up the economy, second it would be a folly to bring a number to what is going to be the impact on the consumption because there are so many variables at play. You have the supply choking up in the initial days of the lockdown, now the entire focus is to ramp up production and today you are at a scenario because the pipeline has been shrunk that whatever you make you are able to sell. Only when you are able to fill up the pipeline's then one would get an understanding to what extent the demand has been postponed, to what extent the demand has been impaired. So it is too early today, but clearly there are some trends which are very obvious and this would be from behaviour perspective.

First very clear is about fear, fear in the minds of consumers about the health, about getting infected, about losing a job, and about erosion of wealth and this manifest as far as our categories are concerned in different ways. If you look at today hygiene, the need for hygiene has gone up several notches. We used to put huge emphasis on educating the consumers to washing hands with soap, we don’t need to do that today because people understand that you need to do that. Not only that keeping your large surfaces clean, kitchen slabs, door knobs clean so there is very clearly a huge focus on hygiene.

The second is health and wellness you want to be physically well, you want to be mentally well, you want to have immunity so that you can prevent the virus from reaching to you or in case it does you can recover fast. So those are very clear obvious things which are happening. Now also because the supply chains are being impacted there are many discretionary categories where you at this stage you feel that the demand is not there or the demand has slowed down? But you know remember something in every recession there is a lipstick effect. People want to indulge in small toys and there is no one I believe who doesn't want to feel good and look good. So I believe even discretionary categories they will bounce back when the availability opens up. But certainly when you see your capital eroding, your wealth eroding then you become much more conscious about spending. So we are clearly seeing a trend towards more sale of price point packs, too early to say whether there will be real big-time down trading, but certainly people will be much more conscious about spending and also the frequency of trips have gone up because people want to have lower outlays for trip and what is clearly a trend which is emerging.

The other is the channels - again you know I believe this is the Renaissance of the humble grocer. People have understood what the proximity means and what a great benefit the grocer brings to you and I think if we can connect the stores digitally then we could perhaps you know really not only protect 100 million lives which depend on the grocery trade, but this could mean a new era for the grocer's. So there are many things which are opening up, the trends are shaping up.

Ridham Desai, Head of India Equity Research & India Equity Strategist, Morgan Stanley in conversation with Surabhi Upadhyay and Anuj Singhal on CNBC-TV18

Q: Is the market also seeing some kind of tectonic shift? The texture of the market is changing, money moving from financials into pharma, digital stocks, telecom stocks, your thoughts?

A: I need to first set the backdrop and then I will come to this very specific point that you raised. The backdrop is that COVID-19 has evinced a very strong fiscal and monetary response the world over and it is quite unprecedented, the world has never seen such a response. Even during World War II, in the aftermath of World War II, we didn’t see such coordinated policy response either across geographies or across agencies - so government and monetary policy getting together.

Even in the Great Depression there was no monetary policy. So this is very unprecedented, it is multiple times more than the stimulus that was put in post global financial crisis of 2008-2009. When we come out of this, all the stimulus that is waiting to kick in, it is going to create a ferocious bull market around the world.

What is required is essentially some comfort that the worst on COVID-19 is over or more appropriately that we have a vaccine or a cure. So when the world starts sensing that we have one of these two things, I think this money is going to move into asset markets and equities particularly. So we have to brace ourselves for that. I cannot time it in anyway, I don’t know whether it is three months down the line or it is going to take six months, that we will have to see and I even don’t know whether we will make a double bottom before that, come back to revisit the March-end lows or not, so lows are imponderables because they depend on how COVID-19 progresses.

The news from around the world is encouraging. In a lot of places where it was threatening to create more casualties, it has now come down. So let us see. That backdrop is in our minds that there is an unprecedented stimulus that has been put in place which is waiting to find its way into this markets as well as the economy once confidence returns.

Coming back to your question, I think world markets are created on the back of new sectors all the time. So in the mid-90s it was energy then it was consumer staples, at the turn of the millennium it was technology, then it was a bull market, it is energy in India that led the bull market - one specific stock in fact - and then we got this big bull market in financials and it has lasted really long. It has gone on for 7-8 years and it has created some serious marketcap in the financial space particularly in non-banking financial companies (NBFCs) and in private sector financials.

I dare say that when financials hit 30 percent of Nifty’s marketcap in February, we may have marked a peak in that cycle. So when a new bull market starts and maybe one has already started and March 24 was the day when we created the bottom in the market, I think financials may not lead the way and the leadership may shift. It may shift to consumer discretionary, it may shift to healthcare, it may shift to energy or it may shift to telecom, it is likely to shift to all the sectors.

That doesn’t mean that we don’t get big rallies and particularly after what has happened to those stocks over the past four-five weeks, we should always be prepared for big bounce backs. I think the leadership of the next bull market is going to be different. We are betting on consumer discretionary followed by healthcare and to some extent energy and that is what we think will lead the next bull market but let us see.

Q: I know you don’t talk stocks but for example you have seen big decline in names like PVR or a Jubilant Foodworks, a lot of these names, a lot of restaurant stocks have fallen a lot, consumption names have fallen a lot, the big concern which is being raised is that even while there might be a pent-up demand, the way we approach things post COVID-19 will be different, so in that sense what part of discretionary consumption do you think would lead this big rally that you are talking about?

A: That was a very important follow-up question. Here is my analysis. So far, India has come away relatively unscathed by COVID-19 and as a consequence I don’t see permanent shift in consumer behavior, so as the company opens up and as things go back on stream, consumer behavior will revert to where it was in February. So a lot of these businesses that are being affected because of the lockdown, because of social distancing, will come back. They may not all come back together and there may be some gaps, some may come back immediately, some may take three-six months and some may take even 12 months. However, the point that I am trying to make here is that I don’t see permanent shifts in behavior because we have not been affected as much.

Even though it is tragic to talk about deaths, the fact is that we have not seen that much of fatalities around COVID-19 even though the disease is still evolving in India and we have not seen the peak, given what has happened thus far, given the low testing yields that India has had, given the low fatality, given the high recovery rate, it seems less likely that we will suffer the same fate that several European countries or even the US have suffered. So maybe in those countries there will be a permanent shift or a more lasting shift from COVID-19 and there will be shifts in business models, in India I think we may not see those shifts and they may be rather temporary in nature.

The other sector in the consumer discretionary space which appeals a lot is autos. I think autos has gone through a big downcycle and in several sub-parts of autos, demand is where it was in 2013 or 2014. So this is really depressed. There should be a lot of pent-up demand that may come to the fore in 2021 or 2022 and even if you just replace the cars that were purchased in 2013 because now those are 8 years old, a lot of those consumers will be back to replace the cars. That itself should drive a pretty strong recovery in passenger vehicles and even in two-wheelers. So I think that is another space and then of course if autos is doing well then the auto component on these should also do well.

So frankly if you are asking me this question, I like almost every sub-sector in the consumer discretionary space, I don’t see much disruption happening in India. For the disruption that was anyway there in place pre-COVID which was technology related, some of that may persist but I don’t see disruption relating to COVID-19 persisting for more than 6-12 months.

Q: I must play devil’s advocate so allow me this question and I want to go back to the bigger call that you have made that a bottom has been made. Where is the conviction coming from because one could counter argue? The bears will argue saying stimulus in India has been underwhelming, bears can argue that our numbers, the rate of infection is still spiking pretty high and we have different issues like congested cities etc. so where is the optimism coming from?

A: I was actually on your channel the day when we had made this call that we may have hit the market bottom that call was premised largely on where sentiments and valuations were then, so we did hit a very big trough on valuations and sentiment around that last week of March. That is when I thought that share prices may have made a bottom. One never knows these things, we can always revisit that, I hate to use any one bear market cycle as a template, but just for argument purposes if we used the global financial crisis as a template the market made a trough in October 2008, rallied sharply and then came all the way back to the October 2008 levels within kissing distance of that level in February of 2009 or somewhere in early March 2009.

In six months we came back to that level and then we started a very big move which went on for several months. So it is not to say that this market will follow that template. Every market has its own behaviour pattern, so one can never be absolutely sure that a bottom has been hit. But at those 7,500-7,600 levels of Nifty we get to valuations which are so attractive that I think it compels us to say that maybe this is the bottom. So that was where the confidence came from, it was not on the bases of where COVID-19 was going to head or where India’s growth rate was going to go -those are issues that get resolved much later.

Markets make their bottoms well ahead of economic cycles so we should not get into the business of forecasting economic cycles when we are trying to call market tops and market bottoms so that is one point. The second point on your question on the fiscal stimulus, the jury is out on this and it is also something that I am debating in my head. The phrase that I have heard from various government sources is that the fiscal package will focus on affordability and not on need. I think precisely that is what we have seen. The government has conserved the fiscal room maybe with two things in mind. One is that it saved some bullets for firing later on and second is that it actually conserves India's macro stability which may also be as important as stimulating growth.

Now if you assume for a moment that COVID-19 has not had such a big impact on India then I think this strategy may actually end up working unlike the western hemisphere where COVID-19 has been very disruptive because of just the scale of the disease. Now having said that it is very clear that the lockdown is creating a lot of pain and therefore my view is that the biggest stimulus that we can get is to come of the lockdown and that is what is happening right now.

We are without making a great fuss about it slowly walking out of the lockdown. So trains are restarting, airports are restarting, stores have reopened and I think over the course of the next two or three weeks if we can bring the large parts of the economy back into working conditions then in itself should be a good enough to pull India out of this. Then what we need is stability, which is still not there, let us not make any mistake about that, but we need that to come back and then I think the economy will look little better.

This quarter is a wash out and there is no doubt about it, the next quarter will also be a problem, it will not be smooth, but I think the second half could be a whole lot better.

Q: Just to extend that argument a little bit more, you had this migrant labour issue, don’t think they are going to come back in a hurry. There have been so many job losses. Yesterday we spoke about Ola and there are so many startups where we have seen some problems. This is going to impact the demographic dividend as well. At some point do you think this will hurt or as you said this is going to be just 3-6 months factor?

A: On migrant labour I think clearly there is going to be some issue, but it is important to get into the numbers. Because what we get to see is only pictures which are very depressing of people stranded on highways and trying to walk home and struggling on very unsafe transportation in an effort to get back because they don’t have roof to live under or a meal to eat. So keeping that humanitarian aspect aside and I was just seeing some numbers that were quoted by Manish Sabharwal – yesterday or earlier today -that only a fraction of the total migrant workers in India actually moved back home. By his statistics and I don’t have those statistics, I am using his statistics without his permission, but it is only 2 percent. It is a very large number, it is a million people, but it is only 2 percent of India’s total migrant workforce. So in India these numbers can get very misleading because we can see a lots of people on the highways, thousands of people but they may not add upto significant portion of our workforce.

I have had this view all along that we will actually comeback quite quickly. Why, because a lot of these people want to start working. You see by not throwing cash at them, by not giving then cash in their bank accounts what the government may have done is basically ensure that we comeback quickly because after all this people need living to make and the only living they have is the job that they have. So the minute they sense that their jobs are back I think they will be back. So that is my current optimism. We will see how that goes.

Just one note of caution that I will give here is that over the past few days we have seen a bit of a spike up in the cases. Actually the metric that I am using is testing yield that is the number of positive cases to the total test that we do. Now India’s testing yield has been amongst the lowest in the world and that has basically suggested to me that we have not really suffered a spread in the disease. So the testing yield is average 4 percent since the onset of the disease. At the bottom it was 3 percent in April today it is at about 5 percent, so it has climbed from 3 percent to 5 percent during the month of May and this has coincided with the movement of people. So as we have started opening up and people started moving around the testing yield has gone up.

We will keep a very close watch on this because we don’t know if this is a beginning of a new trend or it is just a temporary thing. I hope it is temporary I can’t say this for sure. But this testing yield keeps going up then I think we will have a problem going into June, so keep a watch on that. The story on COVID is not over, it is still there in the picture and we should not forget that this is a virus that we don’t know really much about so we have to keep an eye on that.

Shantanu Narayen, Chairman and CEO of Adobe Systems on the show ‘Global Dialogues’ with Shereen Bhan on CNBC-TV18

Q: Let me start by asking you about this whole business of work from home and home-shoring. Do you believe that this is going to be an irrevocable trend as we go out of the COVID-19 crisis and move forward? That seems to be the expectation at this point in time but if that were to happen, what is going to happen to the Valley? These islands of prosperity across Bay area, what happens to those?

A: What happened when the pandemic hit globally was unprecedented as you point out and it is actually quite amazing how resilient employees were in terms of working from home. So, I do believe that this is irreversible. I think people have realised that you can be incredibly productive at home. 

Like all companies, what we first focused on was making sure that our employees were safe, making sure that we were appropriately sensitive to what our customers were going through and then really focused on how we could make our employees productive. What we found is that through benefits of collaboration technology, through the benefits of not having as much time commuting, people are actually adapting to this new normal and I don’t think we are going to go back. 

Clearly on the medical front, until you have testing and therapies and vaccines, this is the new normal and I think like all companies we are really making the most of it. 

Q: You believe that this is going to be an irreversible trend and it might change the way the employees and the employer engage. What will this mean then for this new sort of contract, so to speak, this new code between the employer and the employee? 

A: We are in the intellectual property business and in the intellectual property business, our biggest asset are our employees and our people. There has always been I think in the tech community an acceptance that people need flexible hours, they can work from home and what we have to figure out is, how we create that virtual water-cooler sort of moment when people get these ingenious ideas and innovation is really spurred. 

In terms of trusting our employees that they are going to be productive at home in terms of being able to give them all of the equipment that they need to be productive, in terms of making sure that we have the right tools for each one of them to be collaborative at home, I think we were already the leaders in that particular space. I think the contract is again going to continue to just be about can you get your objectives done and can you continue to innovate? As long as we do that, we really don’t care whether you are in a physical office or you are virtually connected. 

Q: Let me talk to you about the digital economy and what we have seen through this COVID period is that the mega trends that have already been under way for the last few years have been exponentially accelerated. I was just looking at your Adobe Digital Economy Index and what it is showing up as far as e-commerce is concerned, it is only consolidating the shift to ecommerce. What is the index telling you about the mega trends that we should watch out for? 

A: Every company that is global like Adobe has sort of focused on two different issues. The first one has really been about how do we – as soon as the pandemic hit, make sure that we take care of employees and take care of customers. That was the first big shift to make sure that there was safety of our employees, that was top of mind. Once you finish ensuring that your employees can be safe and can be productive at home, clearly the attention turns towards customers and with shelter in place or lockdown, you recognise that the only way you can actually interact with customers is digitally. So, this is going to be this dramatic inflection point as it relates to people recognising that interfacing electronically or digitally first with employees and then using physical where appropriate to augment it is going to be critical. So, every company is really reflecting that after they take care of employees, they are saying how do I get my business back on track and that means engaging digitally with customers. If I don’t have the right website, if I don’t have the right mobile application, if I don’t have analytics about which customers are coming, if I don’t have the ability to personalise that experience for customers, if I don’t have an ecommerce website where I can actually transact business and finish the last mile, you are going to be even more disadvantaged. 

In the stay at home, in the remote economy that we find ourselves in, the urgency to have all of that digital is certainly top of mind. As you point out in our digital economy index, we are finding out whether it is online groceries, whether it is electronics, whether it is the ability to get other essential goods at home, and I think tongue in cheek, we sort of said that everybody is finding that what is up is that people are finding more flexible ways to work at home and so payjama sales are up but pant sales are down. 

Q: What is also interesting and that is something that you talk about, you talked about how this is a inflection point for the digital transformation that many companies have been on, but you also believe that this is going to be the decade of the CIO and the CMO. Explain that to me and what that means for the digital playbook as more and more companies try and adapt to this? 

A: You are familiar with Adobe and what we went through when we went through our own transformation of making sure that instead of selling software in boxes, we were selling software as a service. What we recognised through that entire transformation was that the ability for me to absolutely personalise my offering for you to make sure that you understood what the new features were, what the appropriate pricing was. That was unprecedented when software was sold in boxes as sort of mass distribution. 

So what this really requires is, the CMO is always scared about the brand of the company, they are always scared about how can you emotionally connect with customers, how can you attract customers at the top of the funnel and that’s sort of been the art of marketing your service or your offering to customers. What we believe in this decade is that art will have to be combined with science. Science is where the CIO comes in, which is, is every decision that is being made in a company, is it being made on the basis of fundamental data and how do you combine that art and science in order to deliver the right experience to customers. I think the bar that has been set is, when you are interacting with a financial institution, your expectation is not that, that financial institution engages with you digitally the way another financial institution engages with you, your expectation is that that financial institution engages with you the way you would hail a cab or the way you would order food online. So this digital expectation from consumers has absolutely sky rocketed and this is only going to accelerate that. So the CIO and the CMO as part of the digital transformation mandate that has been frequently driven by the CEO and the CFO becomes even more important. So that need for data and the need for the brand has never been more important. 

Q: When you talk about the need for data, the need for brand, I want to ask you again on what your data tells you on how ready we are here in India or in the Asia Pacific region in terms of having made investments to cater to this customer centricity model that you speak of much more relevant, much more personalized, much more data driven, the AI tools, the investments in that, how ready are companies in the Asia Pacific region and in India specifically on the back of the data that you have?

A: What you are seeing in India from sheer numbers and the hundred and millions of people who are digitally savvy as a result of the mobile revolution that has happened in India, the volumes in India are unprecedented. So I think India is actually leading in terms of the expectations of a new infrastructure and how it is a mobile first economy more so than anything else. 

I think the second thing where India is really pioneered and driven innovation is the cost of those transactions. When you bank with a bank like HDFC, what they have absolutely mastered is this innovation associated with how do you give that service at an incredibly low price. I think as it relates to governments engaging right now with citizens, I think you are going to see another push there as well in terms of what happens with electronic signatures and what happens with the ability to do all of the citizen facing services that you did by walking in to either a place where you might have got a drivers licence or you might have got a ration card, all of that stuff is also going to happen electronically. So I think like all countries what we are finding in digital too is that it needs to be tailored to the right expectations in India. 

I think in India also the payment methods are different because they typically tend to get paid on delivery. So I think the countries will adapt but that fundamental move towards all of this happening online is true everywhere in the world.

Kevin Sneader, the Global Managing Partner of McKinsey and Gautam Kumra, the Managing Director of McKinsey India on 'Global Dialogues' with Shereen Bhan

Q: The world is coming to terms with what COVID-19 means for the economy, for their own businesses individually and everyone is trying to figure out what the new normal is going to be. When you speak with your clients, when you are talking to global CEOs, what are the risks that they are raising with you? What are they most concerned about today?

Sneader: They have been very concerned about the health situation. Everybody recognizes that the focus is around a pandemic, it is not an economic - the initial trigger. The economic impact has come because of the impact of that pandemic. So first and foremost, in the minds of business leaders I have conversation with is, how is the virus spreading and how this has impact on the decisions we make. That is quickly followed by how do we think about either reopening our businesses if they have been closed or re-adapting them to what is now a very different future than one, we had envisaged. So that is now increasingly the focus given where the world as a whole is, recognizing great differences between countries.

Q: I want to talk to you about an aspect that you raise in the two reports that you have written on the outcome of COVID and what the impact is going to be. We are seeing this the world over with governments stepping in with bailout packages, different quantum across different geographies, central banks stepping in as well, what is that going to mean in terms of government and business? Does it necessarily mean more regulation, more scrutiny of the way the business operates, how do you see this playing itself out? 

Sneader: It is definitely a question that we can all speculate around but I think there are some important points to remember. In many parts of the world, government has become the payer, lender and the insurer of last resort and when that has happened in the past, government understandably has expected to play an ongoing role in how that money is looked after and spent. The consequences of those decisions linger for quite some time. 

So it is reasonable to assume that with government having to place an increasing amount of resource in order to ensure either we buy time for the health system to be able to react and cope with the influx of cases or to safeguard the livelihoods of many people and the livelihoods of many businesses as there is a consequence to their action. What it is going to mean is that in some parts of the world, there will indeed be a step up in scrutiny because they want to know how that money has been spent but it also could mean that in some parts of the world the big issue is going to be how do the governments back out of the business? If the government indeed had to step forward, which it has, how does it get back out and what does that look like? 

So however, you look at this, the role that government plays is indeed going to be one that is going to be pivotal in the post pandemic world. 

Q: What are the other trends that we are seeing and this has perhaps been exacerbated because of the COVID pandemic, but trends that had already started a few years ago post the 2008 financial crisis, the retreat of globalisation and the move towards de-globalisation, what do you believe we are going to now start to see happen and what will that mean in terms of restructuring, reordering of global supply chains? 

Sneader: In many cases what COVID-19 has done is to either accelerate or perhaps make more visible trends and forces that were already at work as opposed to star new ones. That is exactly what we are seeing with globalization. 

If you think about the flow of goods, that is already in decline for many different reasons but it was in decline. It was services and data that was increasing goods that we are storing. What we have now got is an acceleration of that decline I suspect because one of the reactions to what has happened is an increased emphasis on resilience over the willingness to look at efficiencies. I think resilience and efficiencies now must come together and that will mean that maybe they will look at their supply chains and decide they want to bring those closer to where the end consumer is. As they do that, that could indeed mean less movement of goods and indeed components around the world.  

The other reality that we are dealing with and part of this next normal is that distance is back. People are much more aware of distance. We spent much of the 1990s and 2000s talking about the death of distance because of technology enabling world to be shrunk and brought closer together. However what we have just had is a movement in time when barriers have gone back up, borders are back in place where they were not for many years and you can see that happening across the world and so too are tariffs and other ways in which goods and people importantly are less able to move around the world than they were in the past.

So if you think about the flow of goods and you think about the flow of people, in important ways an acceleration of the trend against that happening means that globalization is under attack. It was already under attack because of the issues that had arisen around who had benefitted from it but now we are seeing another form of attack on it and I think it is the case that globalization as we know it is going to be very different in the future. I don't think it is going to completely disappear, it is hard to stop the flow of data and information much as many would try but when it comes to goods and people, I think we are going to see a very different kind of slowing form of globalization which would give way to regionalization and perhaps even nation interests far more than we have seen in the last few decades.

Q: What is this going to mean in terms of reshaping of global trade as we know it today? The rise of economic patriotism as well as at this point in time the assumption that as global supply chains shift out of China that countries like India could be beneficiaries, how do you put the two together? 

Kumra: It is important to know that even pre COVID, there has been certain fundamental trends that Kevin pointed too. If you look at trade intensity, in terms of global trade as a function of global output has actually been coming down over the last two decades or actually more in the last decade. Also the share of intra-regional trade has been going up, in fact as you might know about 20 percent of the global trade is now happening just South- South or China- South, and more than 50 percent of the trade that is happening within South and even Europe is now intra-regional. So these trends have been actually much underway and I think COVID is actually going to further accelerate those.

Having said that you cannot deny the equal amount of pressure that is coming on companies globally to drive competitiveness in addition to resilience and I think that is where the opportunity lies.

As you are aware I think the share of China as a percentage of total low cost sourcing to the western world is going down and I think many countries are vying to get a share of that. I think we have taken inspiration from Vietnam in electronics and we can see what Bangladesh has done in textiles and I think India must rise to the occasion now and I think we have this last window of opportunity to actually take a fresh air, but it is going to require getting our act together and really competing fiercely with markets not only like Vietnam and Bangladesh but also Indonesia.

Q: So what does that mean, you are saying that this is our last window of opportunity and India must get its act together to try and draw in investments that might otherwise shift from China to Vietnam, Indonesia etc. and we have seen that trend over the last few years. What will it take for India to be able to do that? We have seen some announcements as part of this Rs 20 lakh crore package that includes reforms announced by the government what do you make of that to start with the reform side, I will come to the stimulus side in just a bit but what do you make of the reform agenda and what will it take to draw in investments?

Kumra: I am actually personally quite encouraged by some of the reforms that have been announced over the last week which I think will make us more competitive in the medium to long term. If I just look at the power one as an example which goes back to export competitiveness, the issue is when we are competing with countries like Vietnam and Indonesia and Bangladesh I think it is fundamentally about cost competitiveness and reliability and unfortunately in a couple of these areas if you take even mobile, electronics, manufacturing and electrical components I think we have a cost difference to cover. If you peel that apart, a part of that has to do with taxation, but a big chunk of that has to do with real issues in land, labour and power cost.

As you know our power cost is amongst the highest in the world and I am delighted that some of the reforms that got announced last week to privatise the discoms in the union territories and to bring cost tariffs, tariff rationalisation are all headed in the right direction. Hopefully, if we can execute on some of those things, I think it will help take one piece of un-competitiveness away, I think we need similar set of initiatives on land and labour for us to be able to compete globally.

Q: You just addressed the reform side of the package, but let me also talk about the stimulus side of the package and McKinsey had done a scenario exercise where your assumption was that if the lockdown were to continue through May and that is the third scenario that you painted and we are in that at this point in time, it could mean a contraction of between 8-10 percent. Now on the back of the stimulus part of the package that has been announced do you believe that we will be able to offset some of the output loss?

Kumra: I think that is too early to tell, since you referred to the scenarios let me just remind you, I think we had talked about two scenarios which predict GDP decline this year of anywhere between 3-8 percent, in the scenario two which was more like minus 3 percent this year we had recommended in fact a fiscal package in the range of about 5 percent of GDP. As you know what is interesting is the government has announced a fairly large resource allocation amounting to almost 10 percent, but as you know I think it has got many things in it.

 As you are aware, the package is quite heavily oriented towards monetary stimulus and extending credit support to different stakeholders in the country. If you were to do apples to apples comparison, I think in reality the fiscal components of that package is somewhere in the region of about 2.50 percent because majority of it actually has to do with monetary and liquidity support in contrast to that we had recommended something in the region of about 4-4.50 percent, but it is quite complex.

As you can imagine that there are many dimensions to the nature of the package and it is not just India, but if you look at any of the global packages whether it is the US or elsewhere, they all have a combination of monetary and the fiscal support.

Q: They do have a combination of monetary and fiscal support, but on the fiscal side you are right that the stimulus, the direct fiscal stimulus announced by India within that Rs 20 lakh crore number, much smaller of course, a large chunk of it is also loans and guarantees. But on the manner in which governments and central banks around the world have responded to the COVID crisis, the kinds of stimulus packages that have been announced and then the expectation on when we could see a recovery and how strong that recovery could be, we have also now seen China reporting some very interesting data, but what do you make of the possibility of a recovery given the kind of stimulus that has been given? 

Sneader: We have to understand that the stimulus in many respects focused on two different tasks. One task is simply bridging, a bridging between where we are until people can literally get back to work and I think that is different from stimulus in terms of where you can stimulate demand and both need to be considered.

But really ultimately what is going to drive the economic recovery is part of the health solution. How quickly we are going to be in a place where people feel comfortable and safe both in terms of going back to their work, but also in terms of customers being willing to go to a restaurant, get on an airline, do all the things that have been disrupted because of the challenge we face . The longer we are in a position where that confidence and uncertainty persists then the deeper the impact economically.

It is why when we have done a series of surveys of business leaders around the world, we find ourselves in what I would call a muted recovery in other words the whole alphabet has been explored. You have heard people talk about 'L', 'V', 'W', 'U', I think we are much more and the executives we interviewed think we are more likely to be in a place where it looks a bit like that well-known athletic move where it is a swoosh, in other words it is a sharp down and then a long slow recovery with some bits and bumps in between, I think that is where we are headed.

If you believe that then even in that scenario we are talking about quarter three of 2022 before we get back to the kind of GDP levels we had before this all got underway and I think that is a more realistic frame in which we can discuss things rather than sharp 'V' shaped recoveries. We are trying to extrapolate too much from early data and trend.

Q: What about India, what are you going with in terms of demand revival and recovery?

Kumra: I think how demand and consumption will recover because that is the biggest uncertainty in the short term. I think the general sense one gets is that, this quarter is going to be horrendous, I think we are looking at anywhere between 20-25 percent contraction in this quarter.

Impact will vary a lot by sector. If you happen to be in grocery, retail or even pharmaceuticals, I think you are in a pretty good place, you are struggling to keep up with demand by and large even though there, there is going to be a short-term blip. On the other hand, I think there vast segments of the economy that have come to a grinding halt.

So, it is very hard to predict. I think part of it does depend on how faster consumption comes back. I think lot of the reforms that have been announced will have an impact in medium to long term but I think in the short term there is still a lot of uncertainty around how these sectors will come back and pickup.

One other thing is execution. A lot of the things that have been talked about last week in the stimulus package and even otherwise for folks like us who live in India, many of these ideas, not all of them, some of them have been talked about for quite a while, I think the key today is now ruthless execution.