Coronavirus: Economic recovery may take over a year, says CII snap poll

With the nationwide lockdown entering the third stage (from May 4 to 17) to contain novel coronavirus, the top industrialists across the country foresee a delay in economic revival and demand recovery.

According to a snap poll of chief executive officers of more than 300 companies conducted by the Confederation of Indian Industry (CII), the lockdown imposed from March 24 has had deep ramifications on economic activity in the country. A majority of the firms continue to anticipate a decline in their topline.

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Two-thirds of the CEOs surveyed were from the micro, small and medium enterprises.

The lockdown brought economic activity to a grinding halt and the survey findings indicate that a majority of the firms (65%) expect revenues to fall more than 40% in the current quarter
(April-June 2020). For the financial year 2020-21, the expectations of a fall in revenue are staggered, with 33% of the firms anticipating a revenue fall of more than 40%, closely followed by 32% of firms expecting a revenue contraction ranging between 20% to 40%.

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.

Further, the survey results reveal that we may experience a protracted slowdown in economic activity as a major proportion of the respondents (45%) feel it will take more than a year to achieve economic normalcy once the lockdown ends. With respect to their own companies, however, the respondents anticipate a slightly quicker recovery, i.e. within 6-12 months with 34% 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. 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.

On the jobs and livelihoods front, more than half of the firms (54%) foresee job losses in their respective sectors after the lockdown ends. A major share of respondents (45%) expect 15% to 30% 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. Among those who have witnessed a wage cut, the duration of the same is ‘Undecided’ for a majority.

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