Economy under Pressure, but to weather the Pandemic crisis.
May 8, 2021:As state after state have decided to impose a complete lockdown, with a few Exemptions of business establishments, it is only a guess what impact will they have on the economy, Though, the economy was only limping back to a growth trajectory after the sledgehammer blow from the 21-day lockdown during the first phase of the Corvid 19, there is a palpable pressure on the economy to keep itself prepared for an eventuality of a severe impact.
Till not there was no indication of a national lockdown like the one imposed duringthe first phase, however, vacillation in taking a clear view of the impact of the current phase was reflected in the industry preparing itself for a complete lockdown. This comes at the back of several states in the last two days, resorting to complete lockdown, which impinges on the mobility of goods and services. This could severely affect the industry’s economic activities reflecting in its profit and loss accounting during the ongoing quarter of Fiscal 2021-22.
While there is a stoic resistance to believing that the impact of the second phase of the novel corona disease on the economy could be only minimal, the rapid rise in the fresh cases setting a record for the daily record at more than 4, 00,000 and 3,253 deaths, has caused a deep concern among the business community to protect its own employees as well.
The reflection of the sentiment came from the President of the Confederation of Indian Industry (CCI), Mr. Uday Kotak, who in a statement three days ago asked the industry to review their operations and minimize the use of in-person manpower, limiting it to only critical operations or activities required by the law. He said all responsible corporates should “Protect their employees and ensure that their employee balance sheet remains healthy. “He urged industry “to curtail all non-essential economic activity requiring the physical presence of employees at the workplace, for the next two weeks,” the chamber said, adding.
Many auto majors, such as Maruti Suzuki, Hero MotoCorp, JCB India, MG Motor, Honda Motorcycle and Scooter India, have taken the lead in halting production temporarily or advancing maintenance schedules in the interest of the safety of their employees, it added.
Several service sector organizations like Kotak Mahindra Bank, TCS, and Infosys have also adopted work from home. The statement coming in the background of a reported forecast of a third wave of Covid-19 assumes special importance. Although not explicitly stating that a third phase was imminent, principal Scientific Advisor, Mr. K. Vijay Raghavan, who had only three days ago painted a grim picture about the onset of a third phase of Corvid 19, modified his statement on Friday said, “if strong measures were taken then a third wave of Covid 19 may not happen in all parts of the country or anywhere at all.”
Meanwhile, the industry, which reported declining sales of passenger cars in April this year, said the wholesales (sales from companies to dealers) of eight main carmakers for the month were down by 7 percent, compared to March 2021. Also, the industry expects the impact to be considered this month. Even as the industry was facing the heat with the partial lockdown and severe mobility restrictions by a few states, Friday’s complete lockdown announced by many states is expected to accentuate their difficulties in their retail sales (from the showrooms).
Meanwhile, a Union Finance Ministry had sought to downplay the impact of the second phase on the economy as “muted”, albeit it may pose a downside risk in the current quarter (April-June). It added that domestic indicators have done well until the end of April and there was an improvement in the Centre’s fiscal position.
However, Global ratings on Friday said indicated that the growth rate for fiscal 2022 was likely to dip to 9.6 percent against its earlier projection of 11 percent under the ‘moderate scenario’, when infections peak in May and falling to as low as 8.2 in ‘severe scenario’. This is the first time a lower than 10.5 to 12.5 percent GDP growth rate forecast by the Reserve Bank of India and the International Monetary Fund (IMF) last month.
Mr. VK Varadarajan is a noted journalist and columnist
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