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It's time to regain a grip on spending... this holds true for governments and businesses as well. Image Credit: Shutterstock

COVID-19 fears put many of us on the backfoot. The moot question that baffles us is how to tackle its spiralling effect.

Among the many elements is how to manage the financial aspect. I assume that austerity is one word that will be the order of the day... and the way forward. It shall apply to all; Governments have to lead by mending spending behaviours. Businesses will have to contain their expenses to reduce the impact on financials, with most enterprises already making such moves.

The same is true for individuals whereby they will purge all expenses other than for fundamental needs to secure their financial security. These measures are needed not only to contain the impact and the fiscal fatigue in the making, but as the way of life for an extended period.

Lay off on wasteful spending

Governments need to pivot towards spending on initiatives to boost demand rather than any indulgence in non-developmental activity. The leadership has to step away from spending on raising statues and extravagant public functions. Globally, leaderships have come under the scanner for wastage and irresponsible spending. It would need political resolve to cut all such expenses.

Cutting excess expenditure, winning on efficiencies, and use of stimulus in an appropriate way will be a necessity for balanced growth as well as a measure of reassurance to people.

Corporates need to move into a culture where need-based spending rules have to be adhered. CEOs have got to mend their lifestyles featuring corporate jets, lavish parties and posh offices and instead aim for realistic pay packages. As per estimates of the top S&P 500 companies, between 2017-19, corporate lifestyle spend had gone way beyond acceptable norms.

Costs related to corporate jet use climbed to 11 percent in just one year, according to figures from compensation research firm Equilar Inc. When millions are losing their jobs and facing pay cuts, corporates have to refocus on bare essentials.

At the personal level

With individuals, private spending has to be tamed to the basic. It is not as a way to check compulsive behaviors but as a way towards responsible social spending. It will be a painful journey, but I believe this will help eventually.

Governments, businesses and individuals must adhere to austerity, not just a short- or medium-term exercise, but embed this as a long-haul discipline. Both business and the individual need to tweak spending. It also offers a window of opportunity for the social order to adapt to new ways of being socially responsible. We need to regimentalize this as a way of life.

While few may argue spending is the way to boost consumer demand and the economy, this should not mean we direct our expenditure towards non-developmental needs. Rather than take measures that are counterproductive to growth, public and private sector leaders should direct all efforts to boost public confidence.

- Tariq Chauhan Group CEO at EFS Facilities Services Group.