CPC survey paints bleak economic outlook for Maharashtra

By: |
April 15, 2020 3:00 AM

CPC used a web-based survey to reach out to 1,252 respondents in 31 cities and towns of Maharashtra.

Maharashtra makes the largest contribution to the nation's economy with the state’s contribution to India's nominal GDP at 14%.Maharashtra makes the largest contribution to the nation’s economy with the state’s contribution to India’s nominal GDP at 14%.

The economic outlook for Maharashtra is bleak with both manufacturing and services set for massive cut in revenues and no visibility of where the business is headed. The sectors can pay labour without any earnings in the business for around two months but beyond that they do not know how things will pan out. However, the Maharashtra state government’s approval rating is marginally better than the central governments in handling the situation.

Maharashtra makes the largest contribution to the nation’s economy with the state’s contribution to India’s nominal GDP at 14%. Maharashtra now also has the largest number of COVID-19 cases in the country and accounts for nearly 22% of all cases in the country. Mumbai, along with Pune, accounts for close to 80% of the COVID-19 cases in Maharashtra and large parts are designated as severe containment areas.

A survey on Maharashtra’s economic outlook carried out by CPC Analytics team of Sanjana Krishnan, Shardul Manurkar, Christian Franz, Vinayak Pachalag and Sahil Deo following the COVID-19 outbreak and the subsequent lockdown has indicated that industry is worried about recovery and are not optimistic about their future. CPC used a web-based survey to reach out to 1,252 respondents in 31 cities and towns of Maharashtra. The respondents were business owners, founders, directors, self-employed and employees from different industrial clusters of Mumbai, Pune, Thane, Nashik, Kolhapur, Aurangabad and Nagpur.

According to the survey, manufacturing firms face the highest economic precarity in the current lockdown indicating that businesses in the manufacturing sector face the highest unpredictability, followed by the food and beverages companies. Travel and tourism sector faces the highest insecurity and economic loss.

Most firms expect a 20-50% fall in revenue on an average and unsurprisingly, smaller manufacturing firms expect to face a greater revenue hit with 75% of firms with 1-50 employees expecting their revenues to be halved in the next quarter. Around 72% of the firms with more than 50 employees too see reduction in the 20% to 50% range.

When it comes to labour, the survey noted that 80% of manufacturing firms with 1- 50 workers and 61% of firms with 50+ employees could retain labour without income for up to two months but beyond that they had no idea how they will manage. The largest dip in revenues in the next quarter is expected to be in travel & tourism at 64%, 45% in retail and 43% in manufacturing.

The biggest concern faced by manufacturing firms is regarding the supply chain, cash flow and withdrawal of labour. Nearly 79% of the respondents had demanded tax breaks to cope with the situation while 67.4% wanted easier loans, 43.8% wanted support to export and 34.2% wanted restriction on imports. “Smaller firms are more concerned about cash flows, lack of credit, decline in wealth while larger firm owners were more concerned about supply chain, disruptions and fall in consumer demand,” says the CPC survey.

According to the respondents, the worst affected sectors in Mumbai were hotels and restaurants followed by travelling and then clothes and accessories. In Pune too, hotels and restaurants were the worst affected followed by travel at 21%

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