A glance at the Indian business landscape amid the viral outbreak
India Info Line , May 07, 2020
Much like the rest of the world, the Covid-19 outbreak, along with the subsequent lockdown mandate, has driven a multi-tier impact across the country’s business ecosystem. In its wake, around 80% of Indian organizations have registered a drop in cash flow, according to a FICCI survey. Moreover, ‘Moody’s Investors Service’ has also forecast low growth prospects for India in the current calendar year, more than halving the previous 5.3% estimate to 2.5%. Besides upsetting the delivery of ongoing projects, the strangulation of mobility amid the pandemic has also caused nearly three-fourth (73%) of the businesses to record massive reductions in orders.
These figures barely scratch the surface when it comes to documenting the massive human and economic toll sustained by not just the country but the world at large. This is why taking a closer look is necessary for identifying and understanding the problem at the grass-roots level and, later, enabling tangible positive transformations. In sync with this idea, here’s looking at three major industries in India and seeing how they are faring amid the crisis:
Travel, Tourism, and Hospitality
Since the onset of the pandemic, nations not only sealed their territories from the outside world but also put travel restrictions within their borders. The result? The global travel & tourism industry came to a standstill. In India, Industry chamber CII recently asserted that the viral outbreak is the worst crisis to ever hit the sector.
In the present scheme of things, the sector will witness an 80-100% drop in both inbound and outbound travel in the April-July period. During the winter holiday season, the situation is being expected to brighten up comparatively, although negative travel sentiments will continue to persist.
On the hospitality front, nearly 70% of the workers employed in the sector are expected to lose their jobs on account of the incumbent crisis, as per the Federation of Associations in Indian Tourism & Hospitality (FAITH). To avoid this scenario, the Federation has approached the Government to institute a support fund to aid the hospitality players under duress.
Manufacturing and Trade
The strangulation of mobility amid the lockdown has also dealt a damaging blow to the supply chains across the world. In the Indian context, the distorted supply chain is driving huge losses to the economy mostly because supplies of raw material as well as finished products from China have been impacted due to the lockdown. The current situation has led to shortages in the supply and delivery of raw materials and final goods within the country itself, to say nothing of the impaired export and import activities.
Let’s consider the upset bilateral trade between India and its second-largest trading partner China. Various sectors in the country, including pharmaceutical, toys, furniture, automobile, and computers, among others, depend on China for raw materials. According to the Ministry of Commerce, China was responsible for 13.7% of India’s total imports while also receiving 5.1% of India’s total exports during the preceding fiscal year. In February, the Covid-19 crisis was expected estimated to affect the trade relations between India and China that amounted to a whopping USD 87 billion.
The physical communication sector
The lockdown mandate also translated into the shutting down of railways, air travel, and public transport services across the country. According to CAPA India, the Indian aviation sector will suffer losses to the tune of USD 3.3-3.6 billion in Q1 of 2021 fiscal in case flight services stay suspended till the end of June.
Recovery prospects and the road ahead
While nearly the entire economy is in shambles due to the pandemic, the Government is taking active steps to ensure that the operations of essential service providers and industries -- including Pharmaceuticals and FMCG -- are kept in motion, though with limited resources. For instance, the Department for Promotion of Industry and Internal Trade (DPIIT) has set up a control room to monitor the transportation and delivery of essential goods in real-time. At the same time, the Drug Controller General of India (DCGI) has instructed the state drug controllers to supply operation data every day. Moreover, the Indian Postal Service is also working to support the transportation of pharmaceuticals and medical equipment amid the lockdown
On the other hand, corporates have also taken into account the losses incurred on account of the ongoing lockdown. To manage the economic fallout and set the country down the path to recovery, business entities are endeavouring to develop robust strategies while collaborating with ecosystem stakeholders to effect positive transformations in the post-lockdown, post-pandemic world.
In the face of this extraordinary adversity, the Government and the private players will need to work in a dynamic synergy to revitalize global economies. As noted Israeli historian and author Yuval Noah Harari recently wrote, “We must act quickly and decisively. We should also take into account the long-term consequences of our actions. When choosing between alternatives, we should ask ourselves not only how to overcome the immediate threat, but also what kind of world we will inhabit once the storm passes. Yes, the storm will pass, humankind will survive, most of us will still be alive — but we will inhabit a different world.”