Four million people are infected and nearly 300,000 have lost their lives to the virus so far. As a result, the world is presently witnessing the worst collateral damage, where people continue to lose their jobs and income. It is estimated that job losses in India are more than 4 times the 30 million Americans who have filed for unemployment benefits over the last 2 months. The data could get worse in India with lockdown being extended in many parts of the country. This probably is the beginning of an unprecedented jobs bloodbath caused by a pandemic.
Both formal and informal sectors are facing tremendous pressure due to loss of business, poor market outlook, lack of demand and / or consumption, cash-flow concerns, and most importantly the pressure to sustain for the next 12 months in the marketplace. At this point in time there are very few industries operating barely to its capacity, and the rest lay low. This is likely to improve, however questions remains: how much time before the demand returns? And will the consumption sentiments change soon?
One of the most talked about and impacted industry is the travel, transportation & hospitality. Imagine the catastrophic down-the-line impact the pandemic and lockdown have caused globally from large cities to the remotest corner of the world. Online order-taking and booking companies lay low without work, globally all airlines are grounded, mediators and brokers are jobless, hotels, hospitality businesses, restaurants and food parlours are closed, tourist transport and cab companies are grounded, home-stays are empty, sight-seeing locations are locked.
This is just to name few areas; there are many more supporting sectors that depend on these industries and are deeply impacted. According to Industry body Confederation of Indian Industry (CII) more than half of the tourism and hospitality industry can go sick with possible loss of over 20 million jobs if recovery in the industry stretches beyond October 2020.
Another big blow has been to the startups and aggregators across this industry; they have already announced salary-cuts and job-cuts and more will follow. Businesses and jobs across this industry be it organised or unorganised have been severely impacted. Several startup companies in this space feel they may not survive the crisis if the situation prolongs further.
Aviation industry has also seen its worst, and as per the recent report by the International Air Transport Association (IATA), the Covid-19 crisis is expected to impact over 2.9 million jobs just in Indias aviation sector, generating revenue loss of Rs 24,000 - 25,000 crore, as reported by Crisil Infrastructure Advisory.
Another industry that is likely to see significant impact in the coming months is our flamboyant Information Technology sector. As crisis deepens, industries across the world have taken cautious approach and have slowed down their spending capacity. This has resulted in significant reduction in new projects. Existing clients are rescoping and prioritising projects in hand. As uncertainty looms, IT companies have already tightened their taps on full-time hiring, cut-down their order-boards for Q3 and Q4, differed joining dates, and some have already started to withdraw offers. Needless to say, candidates too have become more aware and are taking cautious choice before accepting offers or jumping companies. Larger and cash rich companies will have their ways of survival. However, many startups and smaller companies will find it extremely difficult to retain themselves, pay rent and salaries. It is just a matter of time before many of these firms decide to go off-books.
We are in a state of a pandemic, and the world has not seen a crisis like this in the last hundred years. Indias unemployment rate has shot through the roof and people are looking for ways to weather the impact of the corona virus outbreak and the resulting lockdown. According to the Centre for Monitoring Indian Economy (CMIE), at least 50 million Indians have lost their jobs, mostly in the unorganised sector.
The Covid-19 crisis has led to a spike in the countrys unemployment rate to 27.11 per cent as per CMIE. India in Q2, Q3 and Q4 will potentially see several rounds of layoffs from unicorns as well as high growth-stage startups across industry sectors.
The increasing uncertainty as what the future holds has made the governments, companies, and experts to stop and think, as to what can be done to be able to just survive this crisis! It is difficult to classify this situation as a recession yet, but governments cannot overlook the possibility of one soon.
The governments have done their bit to educate every citizen about the contagious virus and how to stay safe by breaking the chain and maintaining social distancing etc. They took decisions to lockdown the country to protect its people and thus decreasing the spread of Covid-19. Now, its time to slowly open the country particularly in the green zones for trade and movement.
As the government readies to ease the lockdown in incremental form, it is suspected that the Indian consumer will stick largely to shopping essentials, and some will find themselves in crossroads between the want and need. This behaviour is unlikely to be reversed anytime soon. This clubbed with the sentiments to retain jobs and save money for unforeseen medical or circumstantial situations, will be prioritised. Even though some industries will start functioning soon, it is difficult to say that demand and consumption will be back on track anytime soon.
Governments across the world are releasing huge economic packages to help boost the economy and move their countries forward. The Indian Government and Prime Minister Narender Modi announced his strategic vision to make India self-reliant and suggested measures to boost domestic manufacturing, production, and consumption in India. In order-to do this, major reforms are required in land, labour, liquidity and law. Strategic projects such as Make in India and Atmanirbhar Bharat seem to boost morale and make India one of the preferred and undisputed leaders in the global supply chain industry. This will largely depend on how the consumer spending mindset recovers and the uptick in demand.
As we speak, the Finance Ministry has announced a massive 20 lakh crore economic package which is roughly 10 percent of Indias GDP; of which 6 lakh crore has been aligned directly or indirectly to the MSME sector, and more announcements can be expected in agriculture, large industries across sectors, government run institutions and more. It is important to understand that most economic reforms and measures will take time to show results on ground.
At this point of time the intention is to protect jobs, reduce unemployment, retain businesses, motivate consumer sentiments and keep the wheels of economy spinning in the right direction.
Covid-19 has knocked us down, but India will not stay down, it will rise despite the fact that nobody knows what the future will be like; we will always find a way to overcome our challenges and come out of this crisis much more stronger.
Facts & References: CMIE | Gartner | WHO | WEF | ILO | IATA | CRISIL | Nicheton
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Beautiful article with wider understanding on Covid 19 And its impact On Indian economy. Must read for all!!15/05/2020 - 11:04 pm