India should have done more to protect jobs: McKinsey official

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Mumbai: India should have done more to protect jobs during the pandemic, a senior official from a global consultancy firm said on April 6.

Alok Kshirsagar, a senior partner with McKinsey & Company, said the United Kingdom ran a very effective programme to protect employment through the payroll protection initiative, while the US was also not so effective because they were not well-targeted.

“I think in India, frankly, we should have done more to protect employment in some way, shape or form,” Kshirsagar said while speaking at an event organised by industry lobby grouping CII.

It can be noted that unemployment had touched record highs during the pandemic across the organised and unorganised sectors. Analysts are expecting a surge in bad loans from the otherwise resilient retail segment for the banking sectors because of such reverses.

Kshirsagar said the boards have to build resilience within a company to withstand shocks and added that it may result in upfront investments for the same.

Apart from people, the broad areas where a company needs to invest include supply chains, distributor relationships, or working capital limits, he said, adding the consultancy has received a lot of queries from companies on the cost of such investments, which may create some redundancies as well.

“It took a while for the boards to come around and it needs to be a cost which you can explain to rating agencies, equity analysts and investors as actually an appropriate and worthwhile cost because of the resilience it provides and obviously the risk-adjusted returns,” he noted.

Kshirsagar said it is the strategy implemented during the pandemic and initiatives like partnerships forged, which distinguishes a better performing company from an average one, and underlined that the stress caused by the pandemic is not a sectoral one.

A study by the consultancy found that companies across sectors that are in the top quartile by performance, and also command a higher share price, are ones that took decisive actions, he said, pointing out that the same is visible across sectors like banking, IT services and auto.

Meanwhile, speaking at the same event Allcargo Logistics’ chairman and managing director Shashi Kiran Shetty said his company faced a slew of challenges during the pandemic, which included being hit by a cyberattack.

Allcargo got out of the difficulties without paying the ransom, he said, adding that its staff had to put in a lot of effort to get out of it.

He said the company, which also operates container freight stations, helped in the de-congestion of ports by taking containers to the CFS, but the government was not allowing it to charge clients for keeping the cargo in the CFS. Meanwhile, private equity major KKR’s managing director Rupen Jhaveri said the first focus for investee companies after the lockdowns last year was to draw down on allocated working capital limits.

He said the fund had the experience of the global financial crisis in 2008, which made it advise investee companies to be surplus on liquidity.