Stress on industry due to Covid-19 to extend beyond June: Survey

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Economic stress on India Inc arising out of the lockdown induced by coronavirus is expected to last well beyond the first quarter of the current financial year, according to a survey.

The Assocham-Primus Partners' joint survey findings also highlighted that companies are planning deferment or cancellation of investment plans and more employers prefer to retain manpower than those seeking to reduce the headcount.

The survey was conducted across sectors, including manufacturing, infrastructure and services, with a sample size of 3,552 persons from each segment encompassing all sizes of the industry- small, medium and large.

As many as 79 per cent of the respondents pointed towards the economic impact of the Covid-19 extending beyond a single quarter with the lockdown resulting in breakdown in the supply chain - from raw material to intermediates to finished goods and transportation to the consumer destination.

''While we expect major easing of lockdown after May 3, even if some states continue with stringent restrictions, the industry faces a long haul of challenges till the world finds a medical solution to the coronavirus pandemic. Hopefully, India remains among those least affected, aided by several factors like young population, ramp-up in health infrastructure, aided by nation-wide lockdown, though at a huge economic cost," said Assocham Secretary General Deepak Sood.

He said, "It goes to the credit of both employers and employees that we have so far avoided displacement of workforce. Companies are resorting to pragmatic solutions like reducing manpower costs and retaining the head count, while employees are responding well to the fast developing situation being among the most important business stakeholders''.

The survey found that the biggest worry, as noted by 33 per cent respondents, arose from the lack of working capital while payment of salaries with output loss, and without cash realisation was the second biggest pressure point for the industry (27 per cent).

When it comes to business revenue, over 78 per cent of the respondents said the impact in the April-June quarter would be the maximum, while it would stretch to the subsequent quarter as well.

As for manpower, the survey noted that most of the participants (36 per cent) said there would be no change in the head count since the companies would like to retain the human resource for re-opening of the economy. However, as many as 26 per cent of the respondents did feel there could be reduction in manpower even beyond 20 per cent of the payroll because of on-going crisis.