Coronavirus continues its bloodbath on India’s economic activity with majority businesses reporting high level impact due to lockdown. With the majority of businesses remaining suspended, “the magnitude and speed of collapse in economic activity that India has seen over the last few weeks is unprecedented and there is tremendous uncertainty about what the future holds for businesses and enterprises,” according to a joint report by FICCI-Dhruva. A majority of those surveyed for the report said that coronavirus is having a ‘high to very high’ level of impact on their business. In fact, this fiscal will not see a major demand boost and majority of firms are staring at degrowth in sales in the current financial year 2020-21.
As business activities have come to a grinding halt, firms are also expecting a major blow to their cashflows and company’s order book. “Unless a substantive economic package is announced by the government immediately, we could see a permanent impairment of a large section of industry, which may lose the opportunity to come back to life again,” the report said. It may also deal a body blow to workers and labourers as jobs are now also at stake. “Over the coming months as nearly three fourths of the surveyed firms said that they may look at some reduction in manpower in their respective companies,” the report said. India’s migrant workers and daily wage earners are already bearing the brunt of the lockdown with no source of living available immediately.
While Prime Minister Narendra Modi has appealed to corporations and individual businesses to not lay off people or cut salaries, the government must look into protecting jobs. “There is a need to render immediate and sizable support to industry to protect people, jobs, and enterprises. Industry members are reeling under severe financial stress and are in urgent need of ample liquidity to ensure business continuity,” Sangita Reddy, President, FICCI, said. Also, there is a need for the government to introduce a series of measures in quick succession to ensure businesses survive this lockdown.