The first week of Unlock 1.0 that started on June 1 has seen an increase in sales mostly due to pent-up demand, stated a survey of Confederation of Indian Industry (CII) of 51 companies. There are, however, still many supply-side constraints including the shortage of labour.
Most of the companies surveyed stated that there has been more than 25 per cent increase in production compared to the lockdown levels. Sales have also picked up 25-50 per cent for 31 per cent of the respondents, while for some it has picked up by as much as 75 per cent, as mentioned in the CII survey.
Higher production and delivery costs, liquidity crunch, labour shortages, lack of public transport for workers prevented a faster resumption of activity, stated the CII survey.
According to the CII survey, as many as 41 per cent respondents said that there has been a 25-50 per cent increase in production from the lockdown period, while 16 per cent said there has been 50-75 per cent increase. As many as 31 per cent said that there has been an increase in sales of 25-50 per cent as compared to the lockdown period. Nearly 30 per cent respondents said that there has been an increase of 25-50 per cent in demand from the lockdown period, stated the survey.
CII Director General Chandrajit Banerjee said that many enterprises were facing demand challenges, and firms in certain sectors in specific regions such as retail, tourism and hospitality continue to be under restrictions regarding opening up. "While usual capacity utilisation is yet some distance away depending on the health factors, we are hopeful that with supply chains functional, the output will keep rising in coming months," he added.
Labour unavailability is a key issue in the supply side as business activity resumes. Businesses also said that banks were reluctant to issue new loans and automatic COVID-19 credit is not available to all companies without collateral.
The nationwide lockdown was imposed on March 25 and was eased out in a staggered manner over the next two months. The government opened up most activities from June 1, with malls and restaurants also opening up from June 8.