FITCH CUTS INDIA’S GDP OUTLOOK
Limited (FIHL), a franchise solutions company, told Mint that the company has fired approximately 30 employees citing the Covid-19 crisis. It has also put some employees on unpaid leaves, for at least 15 days. A second employee said that those who have been told to work from home are getting salaries, but others aren’t.
The first employee also said that the company refused to give any written directive, instead calling people for one-on-one meetings and informing them of these measures verbally. “When I asked whether they can confirm that our jobs are safe post the 15-day period, they said it all depends on how long the crisis continues and they can’t confirm anything at the moment,” the employee said.
No official spokesperson from the company could be reached for comment, despite multiple attempts via email and LinkedIn.
Following the closure of bars and pubs, India’s food services industry that employs around 700,000 people is also in a bind.
If lockdowns continue, the sector could look at a possible 20% to 25% unemployment scenario, said Gauri Devidayal, Director, Food Matters India Pvt. Ltd. Devidayal is also member of the National Restaurant Association of India (NRAI). Restaurant closures could also impact several affiliated jobs including small vendors, and housekeeping and security staff at outlets.
Earlier this week, Confederation of Indian Industry President Vikram Kirloskar urged businesses to “take conscious business decisions.”
(Prasid Banerjee and Suneera Tandon contributed to the report)
NEW DELHI: Fitch Ratings on Friday slashed its growth forecast for India from 5.6% to 5.1% for 2020-21, as Covid-19 hit Indian manufacturers after supply chain disruptions in China.
Fitch joins a chorus of international agencies that have made similar observations in recent days. Standard and Poor’s (S&P) on Wednesday had slashed its 2020 growth projection for India from 5.7% to 5.2% as it feared that the Asia Pacific region may slide into a recession, with countries enforcing lock-downs to contain the pandemic. Moody’s and the Organisation for Economic Cooperation and Development (OECD) have cut their 2020 growth projections for India to 5.3% and 5.1%, respectively.
Fitch said although the number of confirmed Covid-19 cases in India was still low in comparison to the size of its population, it was picking up. This scenario assumes the number of people affected will keep rising in the coming weeks, but that the outbreak will remain contained.
The rating agency said the downside risks to this scenario is that consumer and business sentiment will be hurt, as local governments roll out measures to contain the spread of the virus. “While India’s linkages with China are modest, manufacturers in India are heavily reliant on Chinese intermediate inputs— especially of electronics (60%) and machinery and equipment (47%). Supply-chain disruptions are expected to hit business investment and exports.”
Fitch said difficulties facing the economy have been exacerbated by YES Bank’s collapse. “Frailties in the financial system will further undermine sentiment and domestic spending.”