The country-wide lockdown imposed on 23rd March, while necessary, has had deep ramifications on economic activity. According to the CII CEOs Snap Poll on Impact of COVID-19 on Economy and Industry, while a majority of the firms continue to anticipate a significant decline in their top line, they now foresee a delay in economic revival and demand recovery. The survey saw the participation of more than 300 CEOs, of which nearly two-thirds belonged to MSMEs.
The lockdown brought economic activity to a grinding halt and the survey findings indicate that a significant majority of the firms (65%) expect revenues to fall more than 40% in the current quarter (Apr-Jun 2020). For the financial year 2020-21, the expectations of a fall in revenue are staggered, with 33% of the firms anticipating a revenue fall of more than 40%, closely followed by 32% of firms expecting a revenue contraction ranging between 20% to 40%.
While three out of four firms have identified that a ‘Complete shutdown of operations’ was a major constraint being faced by business, more than half of them have also indicated ‘Lack of demand for products’ as a hindrance to business activity.
Further, the survey results reveal that we may experience a protracted slowdown in economic activity as a major proportion of the respondents (45%) feel it will take more than a year to achieve economic normalcy once the lockdown ends. With respect to their own companies, however, the respondents anticipate a slightly quicker recovery, i.e. within 6-12 months with 34% of the respondents indicating the same. Further, a major proportion of the respondents anticipate normalcy in domestic demand conditions within 6-12 months, post lockdown. Additionally, it is pertinent to note that according to a large proportion of the firms, a recovery in domestic demand, for their product or services, may precede the recovery in foreign demand for the same.
On the jobs and livelihoods front, more than half of the firms (54%) foresee job losses in their respective sectors after the lockdown ends. A major share of respondents (45%) expect a 15% to 30% cut in jobs. However, allaying some concerns, nearly two-thirds of the respondents reported that they have not experienced a salary/ wage cut in their firms so far. Among those who have witnessed a wage cut, the duration of the same is ‘Undecided’ for a majority.
Taking cognizance of the deteriorating industry expectations, Chandrajit Banerjee, Director General, CII said “While the lockdown was necessary to mitigate the impact 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.”
