How will the recession impact the creative sector?

An economist helps us understand

We are two days away from hearing the verdict on the national lockdown, which in all probability, is going to extend, at least in the big cities. That will be weeks full of anxiety and trepidation about the future. Our collective task, after the COVID pandemic is over, will be to rebuild our country and the economy. And a good way to start is by taking an account of where we stand right now. To help us do this, we spoke to Mohit Shrivastava, an economist who has been working closely with the craft and arts industry and who understand the creative industries.  We hope you enjoy this raw, unedited phone conversation. If you have any questions or feedback, please leave your comments:

Here is an edited transcript of the above conversation:
Mohit Shrivastava, economist

We have been in a strict lockdown for more than a month and we can’t wait for it to get over. But there’s also an impending recession and we are very nervous and worried about it. Many of us are feeling the impact already. There have been salary cuts, delayed payments, layoffs, businesses are being shut and we know that there is more to come. What does this mean for us? To help us understand this? We have with us an economist who knows the arts and crafts sector very well. Mohit Srivastava. Mohit has been a fellow at Sahara pedia and online repository of Indian art and is a research scholar at Delhi School of Economics. This is a telephonic conversation. I hope that it helps you in making some sense of the situation. Please write to us with that. questions and we will get specific answers for you. So here we go. Mohit I must tell you that there is nothing at all about the design industry, at least on the internet, there is no documentation and there is no clear segregation of where this industry falls, under sector and how does government see this industry? So, so, you know, we basically don’t have any documentation. But can you tell us a little bit about where can we place this industry in this whole economy?

Mohit: I think the first thing to understand is that it might seem that it’s that the government doesn’t know where to place it and all that they need very little documentation. But I think the important thing is that the big distinction in the economy is between organized workers and non-organized workers. I think, again, design industry falls into organized workers. So that’s a good thing because the unorganized workers are the really vulnerable lot; organize workers, they have some sort of some benefits that they get from work in terms of severance packages, in terms of, you know, sick leaves, in terms of, you know, in terms of pay and all that. So yeah, I think even though it may seem like government doesn’t know where to place it, but definitely design industry is an organized industry and and it’s I guess it would be a little bit of intersection of textile and this intersection of labor and all these things. Yeah. Then let’s talk about the economy in general. In fact, your professor Jayati Ghosh very recently said that if our economy was rolling down the hill, now it is poised to fall off the cliff…

Mohit: I think that goes beyond doubt. I think there’s a little doubt about that. IMF said that India’s economic growth is going to be 1.9% revised. I think that is also, and this is not my opinion, this has also been in a lot of very respected statisticians. I think that is also a ludicrous thing. I think it’s in this quarter, the first quarter is going to be negative. And I think there’s a difference in the fund since if you look at the West, in the West banks would be much better. We had a bit of a mess with the financial sector already in India, and the West was doing much better than we were when the Coronavirus crisis hit us. And they had their own set of problems. Yes, I think it’s going to go bad also because we know that unemployment situation in the country has been the worst it’s been in 42 years, even without the corona virus. And it’s only about to get worse, and there’s no work available, you know, and everybody is forced to be inside their homes, obviously, it’s going to get worse, there is no doubt about that. So how does this negative growth, as you said, going to affect the creative industry?

Mohit: I think the clearest way would be to see that is, you know, people are going to lose clients, because offices are going to be shut. I think contracts will have to be renegotiated, you know, things will get postponed down the line, a lot of projects might actually get cancelled also. A lot of funding for a lot of projects might be withdrawn headway. And it’s not something that is specific to design industry, I think people who work across this sector, and yes, let’s say, I mean, having I mean even even in core technology sectors, which are the mainstay of let’s say, you know, mainstay of growth at one end of the spectrum in some sense, even those sectors are suffering. So, there is very little doubt that… because I understand design, is catered to clients in it is centere around the needs of clients and, and then all of that. So that kind of business to business model you guys follow. Therefore, you know, when businesses are generally getting shut, and they are not being able to generate revenues, they will have very little to pass on to, you know, those entities that depend on these businesses to sustain the ecosystem such as yourself. So, that is why. Right. In the situation, we have a certain eternal optimism, who say that if certain sectors are not doing well, the design industry should concentrate on other sectors. Can you identify if there are any sectors that are doing well we can you channelize our resources and talent.

Mohit: I think it’s difficult for me to say like that. And I would also like to know who the eternal optimists really are. But I think that, again, like I said, for instance, the core technology sectors, they are doing well. The sort of, you know, your your IT firms and I don’t know what kind of intersection you guys would have with that. I don’t know if product design or some part of it would have anything to do with it. But I really don’t know enough to be able to say what is the bright spot. I would only suggest that the only thing is that because the thing would be things are going to get difficult. So the focus should be on trying to retain as many clients as you can for as long as you can maybe take the projects down the road a little bit, while trying to regain your clients and something like that I suppose. That would have to be the way. Okay, let’s shift our attention a little bit to the craft sector, that is, I think your expertise as well. Because there is a slight intersection between design and craft, and esepecially when it comes to product design, there is a sort of a dependency on the skilled labor, the craftsmen. So how do you see the craft sector in the coming future?

Mohit: See, the major way in which these crafts people sustain themselves… I work with these local craft clusters and all that, there mainstay would be having these art fairs or, you know, there are these big you know Crafts Emporium in Delhi and major cities in the country and all the industrial towns, so the mainstay was that but now all of that is shutting down, all retail outlets are closed and it’s not very easy to shift to online retail that quickly. It’s not easy to shift to online retail for things even as common as even apparel and, and clothing and all of that. It’s difficult to do that even for the other things. So, I mean, it’s going to be bad even for the crafts people, even for the people in the crafts industry I think at least for the foreseeable future. So yeah. Also you have been an economist, but you also know a lot about people’s behavior when it comes to buying and investing. Well, there is again, a whole I can I will say that these are the eternal optimists who say that now probably now that we have a pause, and we are all in a lockdown, and we have time to think over and analyze more. Probably will also be moving towards more ethical buying and you know, there will be shifts towards sustainability across industries and across the retail sector. Do you see anything like that, but it’s just, you know, a lockdown talk, and things are going to go back to…

Mohit: This is an interesting idea, although I haven’t seen any data points to back this up yet. I don’t know if it’s been in lockdown automatically means people will move towards ethical consumption. I think there is an argument to be made about this both sides, but it’s too early to say anything about this, I think, I think it’s true, I think as a matter of fact, people are going to explore if you have, if you have people who want to do ideal stuff like this, because they think that that is going to be the next big thing, I think, I think generally we see that ethical consumption over the last, you know, over the last decade or so, because of various movements across the world, there is a general trend towards it for a very specific segment of population towards this kind of ethical consumption. So, I think once Corona is over, that trend will resume. So, maybe they can look forward to that. It’s not necessarily thinking of it as emerging out of the current situation, the current Corona lockdown and all that. Mohit, what happens to the freshers or people who are just entering the market in a situation like this?

Mohit: I suppose we would have to wait. See, I mean, forget about other places, but for instance, even we’ve seen that you know the US is canceled H1B visa temporarily. So that basically means that even across the top IITs, people would have been hired to go directly from, you know, elite campuses in India to US to Silicon Valley, we know that those people will not be able to go for some time. So when that is happening, and that really is the topmost bracket of our labor market, let’s say. That’s the 101 brain drain of some kind, and those are the most skilled workers and they’re finding it really difficult to go out. But again, the thing to emphasize here is that this is a temporary thing and it’s going to it’s going to go away so freshers of course are going to be in bit of a trouble, but I think I mean, obviously campus placements and all these things are going to are going to take a beating. But I think that can also be an opportunity for people to think about, think about how they can synergize with other startup opportunities that are available around them. Think of other ways, if nothing else, just wait it out a little bit longer. I don’t know, maybe party a little bit more for some time, because see, the question is that peak is going to be there, I think the peak is going to hit us. But by definition, the peak is also going to come down at some point. So you have to you have to look forward to that time when it comes down. So if, if you are currently on the precipice of going into the labor market, if there are other skills you can acquire, in the meantime, let’s say a lot of people sitting at home can do a lot of things can learn new things, they can do that. That that will prepare them well in advance for a situation after when all of this is all because once the lockdown gets lifted and there is hiring. I’m not saying hiring is on complete freeze. I am pretty sure it’s not. But I’m just saying that it’s going to be much, much lesser. So when the lockdown lifts and when things eventually resume a little bit, I think then they can they can prepare themselves for something like that. Right. Mohit, very interestingly you mentioned the startup opportunities, and which was exactly my next question. How do you place the startups in this scenario, especially the startups which rely on creative industries?

Mohit: See the thing with start ups is again that some startups are, for instance, being able to utilize very few of them. I don’t think this necessarily pertains to design industry, but it’s a general example. Some startups, very few of them, are being able to find ways of managing themselves in the COVID situation. And in fact, there are some startups that we know of, who are manufacturing at scale things like sanitizers, providing services, and all of that. And in fact, you know, in fact, a lot of it, maybe not the kind of design, industrial design, like for instance, a lot of the need of the medical fraternity now is a kind of some sort of design innovation. So, a lot of startups are doing r&d tech on that. So, I mean, there are these opportunities there, but again, they’re there for people who are looking for it, who are willing to adapt their skillset to it, and are able to look around. So disruption, when disruptions happen, you have to find what works for you, what works for your potential employer and all of that. Yeah, so you have to make that connection and see what adapts with your skill set. Okay, Mohit, I wanted to ask you this question in the beginning, but then I thought that I have some sort of an idea about the scenario. And now I want to come back to this question, what is going to be the effect of this extremely strict lockdown on businesses in general, but also the creative sector? Right now also, it just seems, we don’t even have a date when it ends. So what’s going to be the effect of this?

Mohit: See, again, I think that the gauge is very difficult. In any case, I think the the thing that people have to remember that even when the lockdown ends, and the vaccines are going to come and all of that, the virus will stay with us, especially because in a lot of countries in the world viruses is still in the early stages of transmission and all of that. So a lot of things will have to change for the forseeable future the way we start jobs, the way we do our work. And so I think the same would apply to creative industries. I think there is going to be a hiring freeze of certain kind. I think that also there’s going to be a shortfall of revenue. And, and I suppose creative industries are generally the industries that can do well, when other businesses are doing well. When other businesses are in surplus, that’s when you have cash flow to these creative industries. So I think the challenge would be for creative industries to be able to find a ways themselves to be completely indispensable to businesses. So maybe this is the time to think about that. I don’t know. I mean, you can maybe tell me what you think about this, too. So I think you’re right. I think you’re right. Also the creative industry in life dependent on other businesses, but one thing that works in your favor is that they are creative people and their entire practice, and years and years of practice and education is dedicated to both creatively thinking about problems and finding solutions where they don’t exist. So I feel bad putting the entire onus on them.

Mohit: No, no, no. Of course. Let’s go to the last question. That is also that how can we fortify, especially the creative industries and talking about art, crafts and design all of them together, how can how can they fortify themselves for the future? And what should be our expectations from the government? This government.

Mohit: I think it’s very… See we know that the government announced one relief package, which was just very specific. They’re going to announce the second one, we have murmurs of that, which is going to be on MSMEs, which is going to be on unorganized sectors. So I don’t think they’re really thinking of the creative industries or all of that. I think that in terms of fortification of arts industries, I mean, art markets will pick up I think, you know, that is that is quite certain. I mean, things are already getting postponed, but they will pick up. All the big exhibitions are supposed to happen in Delhi right now at museums and all of that, other art galleries. Art galleries are stamp shut, but you know, those, those exhibitions aren’t going anywhere, they’re going to happen at some point in the future. So, so you have to just prepare for that. You just have to wait for the time and all of that can happen. And you are right that when praxis of people working in the creative industry, the industry professionals, is that they are creative people, then they should be able to find ways of… I mean, I hope they’re able to find ways of making themselves indispensable in time like this. Absolutely. Right, Mohit. Thank you. I think that was all and you’ve been extremely helpful.

Mohit: I’m very happy to help. I don’t know how much help I was. But I’m very happy to be able to say these things. Yeah. No, I mean, I’m very thankful for you because I think it was really struggling to find economists who could comment on the creative industry. And I think a lot of practicing economists do not do that. So we are really thankful to you for at least doing that. Keeping a tap on the creative industry because it also gives us a sense that yes, we are part of this bigger economy and we will come out of this.

Mohit: I think I should not end this on a doomsday note because there’s enough of that out there. That’s what I am saying. You see even in places like Wuhan and all that, now, so for instance, economy of Hong Kong. Hong Kong is one of the places in the world where a lot of art sales happen or art really happens. And it is one of the key centers, right after UK and US, so eventually Hong Kong is looking at… you know what Hong Kong is doing is very interesting… they have put their exhibitions online and they are trying to catalog it so that anybody can see those exhibitions online. So there are ways of working around it. But in other case, you know, I mentioned Wuhan, because Wuhan is partially opened up and things are sort of getting back to normal. So we’ll all get past this. I think it’s important to recognize that because there’s going to be a peak, by definition peaks also come down. So it will be behind us and things will surely enough go back to normal. You have to just prepare and manage expectations and look for the time how you will be able to best serve yourself for that time. Yeah. Right. Thank you Mohit, on that note, I will close this conversation and thank you so much for taking out time.


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