Lockdown hits revenues by 40%, 80k jobs; recovery needs a year

The survey results, conducted by CII, reveal that the country may experience a protracted slowdown in economic activity

coronavirus, COVID-19, Lockdown, lockdown extension, revenue loss, business, job loss
On April 14, when the lockdown was extended until May 3, Barclays brokerage revealed that the move may inflict an economic loss of USD 234.4 billion, and result in stagnant GDP for calendar year 2020. Photo: iStock

The lockdown, imposed in view of the coronavirus outbreak, has brought economic activity to a grinding halt, the Confederation of Indian Industry (CII) said on Sunday (May 3), 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.

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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.

Related news: Moody’s cuts India’s 2020 GDP forecast to 0.2% from 2.5% in March

Another survery conducted by the Retailers Association of India (RAI) on 768 retailers, employing 3,92,963 people across India, revealed that around 80,000 jobs are expected to be cut due to the extension of lockdown.

“Small retailers are expecting to lay-off 30 per cent of their manpower going forward, this number falls to 12 per cent for medium (sized) retailers and 5 per cent for large retailers. On the whole, retailers who responded to the survey expect lay-off of about 20 per cent of their manpower,” the RAI said, expecting a retrenchment of 20 per cent of employees by those featured in the survey, amounting to 78,592 people.

The country-wide lockdown imposed on March 25, while necessary, has had deep ramifications on economic activity, the 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.

Related news: Ind-Ra slashes FY21 GDP growth down to 1.9%, lowest in 29 years

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 April 14, when the lockdown was extended until May 3, Barclays brokerage revealed that the move may inflict an economic loss of USD 234.4 billion, and result in stagnant GDP for calendar year 2020.

“The economic growth will be zero for calendar year 2020 and when seen from a fiscal year perspective, will rise 0.8 per cent in 2021,” brokerage Barclays said in a note.

According to the note, the three-week lockdown till April 14 was likely to have an economic cost of USD 120 billion, which after the extension announcement was estimated to balloon up to USD 234.4 billion and is only going to further damage the economy with the lockdown being extended for two more weeks until May 17.

(With inputs from agencies)

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