COVID-Hit Economy May Take More Than A Year To Recover: Survey


The lockdown due to coronavirus scare has brought economic activity to a grinding halt accompanied with job and livelihood losses, according to an industry chamber survey.

The country-wide lockdown imposed on March 23, while necessary, has had deep ramifications on economic activity, a snap poll conducted by CII has said.

According to the CII CEOs Snap Poll on Impact of COVID-19 on Economy and Industry, while a majority of the firms continue to anticipate a significant decline in their topline, they now foresee a delay in economic revival and demand recovery.

The survey saw the participation of more than 300 CEOs, of which nearly two-thirds belonged to MSMEs.
Citing findings from its CEOs, the survey indicated that 65 per cent of the firms expect revenues to fall more than 40 per cent in April-June quarter.

Taking cognizance of the deteriorating industry expectations, CII Director General Chandrajit Banerjee said “While the lockdown was necessary to mitigate the impact coronavirus on the population, its 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.”

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.

On the job 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, nearly two-thirds of the respondents reported that they have not experienced a salary/ wage cut in their firms so far.

With respect to their own companies, however, the respondents anticipate a slightly quicker recovery within 6-12 months with 34 per cent of the respondents indicating the same.

Further, a major proportion of the respondents anticipate normalcy in domestic demand conditions within 6-12 months, post lockdown.

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.

The survey also points out 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.