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Lockdown badly hurting economy

Lockdown badly hurting economy

Just a week ago, the Centre gave a clarion call to India Inc asking the captains of industry to protect jobs and salaries of their employees and even those who were on contract labor. On March 23, the government issued an advisory on the same.

The advisory read that those who take leave from work as precaution to save themselves from the deadly coronavirus should be treated to be “on duty.”

Despite this, several companies, especially in the aviation, travel, hospitality and manufacturing sectors, have already started announcing slashing of salaries of their employees or asking them to go on leave without any pay.

The nationwide 21-day lockdown has dealt a severe blow to the business houses, which were already reeling under pressure in the wake of the spread of the novel coronavirus.

The Confederation of All India Traders estimated a whopping loss of about $30 billion already incurred by the country's 70 million retailer in the last 15 days. The Indian retail sector comprising small, medium and big traders employing 450 million people, does a monthly business of about $70 billion.

With factories shut, supplies of essential items have also been strained.

“My factory has been shut since last nine days, naturally there is no revenue. How can I pay my staff? The government can ask businesses not to slash salaries but is it possible when I have no earnings?” an entrepreneur dealing in exports of engineering goods said.

The story is no different with large corporate houses, which too have seen businesses coming to a near halt.

A human resource executive engaged with an American multinational said that there is an unprecedented rise in fear and panic among the workforce across all spectrums in India.

“People were already gripped in fear and uncertainty since February but with this three week lockdown, now we see sentiments hitting rock bottom with unprecedented panic and in many cases depression about jobs,” the HR officer said on condition of anonymity, adding that thousands of households are recalibrating their lifestyles in anxious anticipation of pay cuts.

Salary cuts of employees will further thin consumption demand, making recovery even more difficult. People have started deferring their purchase decisions for most goods including vehicles, air conditioners, and refrigerators beside houses.

Many businesses and export houses have urged the Centre to switch to a partial lockdown instead of a complete closure of operations for three weeks.

While Finance Minister Nirmala Sitharaman came up with a Rs 1.7-lakh crore relief package under the Pradhan Mantri Garib Kalyan Yojana for the poor, the Reserve Bank of India (RBI) announced a slew of measures leading to an additional liquidity injection of Rs 3.74 lakh crore into the system. These moves will definitely help in easing the situation only if the total lockdown is lifted and companies allowed to restart operations.

“How will I benefit from the RBI measures if I cannot even start my factory, the loss will be huge irrespective of these measures” said another promoter of a mid-sized business.

The complete lockdown is badly hurting the economy..