The country-wide lockdown imposed on March 23, while necessary, has had deep ramifications on economic activity.
A CII CEOs Snap Poll on Impact of COVID-19 on Economy and Industry has found that Indian industry not only anticipates a significant decline in their topline, but also fears that economic revival and demand recovery may take more than a year. The survey saw participation from more than 300 CEOs, of which nearly two-thirds belonged to MSMEs.
Majority of the respondents (65 per cent) expect revenues to fall more than 40 per cent in the current quarter (April-June 2020). For 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.
A similar snap poll conducted a month ago by CII had found significant majority of firms expecting revenues to fall more than 10 per cent.
While three out of four firms have identified 'complete shutdown of operations' as a major constraint being faced by businesses, more than half of them have also indicated 'lack of demand for products' as a hindrance to business activity.
The survey results also suggest the possibility of a protracted slowdown in economic activity. Forty five per cent of the respondents say it will take more than a year to achieve economic normalcy once the lockdown ends. However, with respect to their own companies, 34 per cent of the respondents anticipate a slightly quicker recovery, i.e. within 6-12 months. The CEOs also say the 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 per cent) foresee job losses in their respective sectors after the lockdown ends. A major share of respondents (45 per cent) expect 15 per cent to 30 per cent cut in jobs. However, nearly two-thirds of the respondents reported that they have not carried out a salary/wage cut in their firms so far.
Taking cognisance of the deteriorating industry expectations, Chandrajit Banerjee, Director General, CII, called for a stimulus package for the industry. "While the lockdown was necessary to mitigate the impact coronavirus has 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," he states.