Covid a once-ina-century crisis: K M Birla

Hindalco Industries Chairman Kumar Mangalam Birla has said COVID-19 and associated lockdowns have triggered a once in-a-centur y crisis for the society and the economy and the countr y's GDP may contract in 2020-21.

He mentioned that COVID-19 struck India at a time when the underlying economic conditions were subdued on account of heightened global uncertainty and stress in the domestic financial system.

"It is estimated that about 80% of India's GDP originates from districts which were classified under red and orange zones during the lockdown, where economic activity remained severely constrained.

Correspondingly, India's GDP is likely to contract in FY21, which would be the first such instance in over four decades," Birla said in a letter to shareholders.

Given the fog of uncertainty all around, it is hard to be prescient in these times, Birla said. A stringent national lockdown to slow the spread of the pandemic started in the last week of FY2020 and remained active to var ying degrees in different geographies through most of the first quarter of 2020-21.

"But there is little doubt on one reality: companies with quality leadership, sound business fundamentals, and a track record of winning in turbulent times, will emerge as champions in the new global order," he said.

This year will see an economic contraction, but this 2020 recession is turning out ver y different from the past recessions, Birla said.