Corona Crisis: Business activities significantly hit; recovery may take over a year

The lockdown has brought economic activity to a grinding halt, CII said on Sunday, 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. 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.

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