CII: Covid-hit economy may take over a year to recover

CII suggests that districts with high economic activity should resume all industrial and business operations, including in containment zones with highest safety protocols

NEW DELHI: The lockdown has brought economic activity to a grinding halt, CII said on Sunday, citing findings from its CEOS survey, which indicated that 65 per cent of the firms expect revenues to fall more than 40 per cent in April-june quarter.

The survey results reveal that the country may experience a protracted slowdown in economic activity, as 45 per cent of the CEOS polled feel it will take over a year to achieve economic normalcy once the lockdown ends.

NEW DELHI: The lockdown has brought economic activity to a grinding halt, CII said on Sunday, citing findings from its CEOS survey, which indicated that 65 per cent of the firms expect revenues to fall more than 40 per cent in April-june quarter.

The survey results reveal that the country may experience a protracted slowdown in economic activity, as 45 per cent of the CEOS polled feel it will take over a year to achieve economic normalcy once the

lockdown ends. The snap poll saw the participation of more than 300 CEOS, of which nearly two-thirds belonged to MSMES.

On the career and livelihoods front, more than half of the firms foresee job losses in their respective sectors after the

lockdown. A significant share of respondents (45 per cent) expect 15 per cent to 30 per cent 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.

The country-wide lockdown imposed on March 25, while necessary, has had deep ramifications on economic activity, CII said. For the full financial year 2020-21, the expectations of a fall in revenue are staggered, with 33 per cent of the firms anticipating a revenue fall of more than 40 per cent, closely followed by 32 per cent of firms expecting a revenue contraction ranging between 20 per cent to 40 per cent.

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.

“While the lockdown was necessary to mitigate the Coronavirus impact 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,” CII Director General Chandrajit Banerjee said. 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.

Meanwhile, Confederation of Indian Industry (CII) called for economic contribution of districts to be taken into consideration while classifying lockdown zones.

Districts with high economic activity should resume all industrial and business operations, including in containment zones with highest safety protocols, said CII in its report titled ‘A Strategy Note on Resumption of Economic Activities in Industrial Areas', submitted to the government.

The government notification of May 1 has permitted industrial estates, special economic zone (SEZ) and industrial townships with restricted entry within urban areas of red zones to commence operations.

The industry body said that all industrial units, including in non-notified industrial areas and standalone units, be allowed to function in urban areas. These should include nonessential goods and services as well. It has recommended that close surrounding areas can be classified as orange zones where industrial activity can be continued with strict precautionary measures and monitoring.

The distinction of essential and non-essential items should be removed and all factories should be permitted to restart, according to CII.

“The third phase of lockdown necessitates a focused strategy to minimize economic contraction due to COVID19, without compromising on efforts to control the contagion. Prioritising districts with heavy presence of economic and industrial activities with continued operations accompanied by strictest precautions can help enterprises to remain financially sustainable while averting job losses,” CII Director General Chandrajit Banerjee said.