The corona virus outbreak, and the subsequent country-wide lockdown, has deeply impacted the domestic economy with a majority of the firms expecting a significant decline in their topline and bottom-line in the current and previous quarter, demand declining and jobs getting impacted according to a CII CEOs Snap Poll on Impact of COVID-19 Lockdown on Industry. The survey saw a cross-country participation of about 200 CEOs which was conducted electronically.
The survey results indicate that a significant majority of the firms expect revenues to fall more than 10% and profits to decline more than 5% in both, the current quarter (Apr-Jun 2020) as well as the preceding quarter (Jan-Mar 2020). The expectations of this sharp decline in both revenue and profit growth by domestic firms could foretell the significant impact of this outbreak on GDP growth.
Further, most firms (80%) have claimed that their inventory was lying idle at present. However, more than 40% of the firms expect their stocks to last beyond a month once the lockdown ends - indicating the firms’ expectations of a demand slowdown in the post lockdown period.
During this lockdown, a majority of the firms engaging in production of essential products and supply of ancillary goods are facing constrained operations in production and supply of essential goods and services. Firms have revealed that access to manpower and movement of products have emerged as major constraints in essentials trade, be it manufacturing or warehousing & transport or retail sales of these essential commodities. While the Central Government has allowed manufacture, transportation and distribution of essentials, the enforcement at the local level has implemented the lockdown on essential commodities as well as services.
On the jobs front, about 52% of the firms foresee job losses, in their respective sectors, resulting from the Impact of COVID-19 outbreak and the ensuing lockdown. While the proportion of jobs that are expected to be cut are quite staggered, significant proportion of the firms (47%) expect less than 15% job loss while on the other hand 32% of the firms expect to shed about 15 – 30% of jobs, once the lockdown ends.
In view of this adverse industry expectations, “the government could announce a fiscal package for the industry and implement it on fast track mode especially financial support to MSMEs, given that the sudden imposition of the lockdown has significantly impacted industry operations and the uncertainty of a recovery threatens substantial loss of livelihoods going forward”, said Mr Chandrajit Banerjee, Director General, CII.