The coronavirus outbreak and a followed lockdown has caused huge losses to the corporate world. With organizations closing in on their offices, sending employees to work-from-home until the crisis in over, global economy has come to a halt.
Lately, there have been many reports about companies laying off employees or sending them on furlough in a bid to conserve cash to tide over the situation. But a decline in business demand has led to a loss in revenues which further complexes the situation.
Recently, a survey conducted by the Confederation of Indian Industry (CII) highlighted that the coronavirus pandemic and lockdown would result in massive revenue loss and job cuts in the Indian economic system.
The survey titled “CII CEOs Snap Poll on Impact of COVID-19 on Economy Industry” based on the responses of more than 300 company heads across India gave a brief idea about the financial crisis lying ahead of India.
CII is a non-government business association comprising private and public sector companies. Two-thirds of those surveyed were company heads of micro, small and medium enterprises (MSMEs).
Around 65% of CEOs across the country expect revenue to fall by more than 40% in the current quarter (April-June 2020), according to the survey.
The survey revealed that 54% CEOs also anticipate job losses in their sectors post the lockdown. Of this, 45% expect 15-30% job-cuts.
Of those surveyed, 44.7% are of the view that it will take more than a year to resume normalcy in the economy, while 34% anticipate their companies to recover in a period of 6-12 months.
The survey revealed that complete or partial shutdown of operations, lack of demand for products, inaccessibility of delivering products, credit crunch, unavailability, or constraints in the movement of labor, no access to raw materials are some of the main constraints in the operation of businesses, the survey revealed.
Taking cognizance of the deteriorating industry expectations, Chandrajit Banerjee, Director General of CII, said “While the lockdown was necessary to mitigate the impact of coronavirus on the population, it has had dire implications for economic activity. At this hour, the industry awaits a stimulus package for economic revival and livelihood sustenance besides calibrated exit from lockdown.”
According to CII, the country’s high performing economic districts should be allowed to play by different rules in the third phase of the lockdown beginning on May 4.
In a strategy paper submitted to the Central government, CII has called for changes in zone classifications, saying that the 100-150 districts with the highest economic value — identified either through GDP contribution or density of industrial clusters — should be allowed to restart industrial activity, even in containment areas, if stringent rules are followed.
It argues that the cost of 100% testing and aggressive health protocols is lower than continued shutdown in these areas.
The survey also highlighted that almost half of the respondents say an economic recovery will take over a year.
CII also suggested that full industrial operations can be restarted in these priority districts, even within containment zones, if aggressive door-to-door testing, or group testing covering 100% of the population is carried out, and stringent sanitation and distancing protocols are followed.
Earlier, the industry body had released another survey which predicted that around 52% of top corporate bosses in India anticipate that job losses will occur after the nation-wide lockdown is lifted. The survey also found that 46% of the CEOs do not expect job cuts while the rest 2% are not sure.
On a positive note, the only relief from the survey is that 65% of those surveyed have not experienced wage/salary-cut in their firms.
However, 48% feel that if a salary-cut is imposed, the tenure will largely remain undecided.
In Maharashtra, as on Saturday, 8,220 units are in production with 1.6 lakh workers reporting to sites after the state introduced certain relaxations post-April 20.
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