As the nation tries to fight the second wave of the COVID19 pandemic, which has brought with it record number of infections and fatalities, PHD Chamber of Commerce and Industry conducted a quick industry survey to assess the impact of the current situation on industry.
The survey, which was conducted across 34 sectors, revealed that 73% of respondents were struggling with rising cost of raw materials as restrictions in many parts of the country have impacted the pace of economic recovery with uncertain economic environment, disruptions in supply chains and contraction in demand.
Other key challenges faced by businesses are availability of working capital (64%), Maintaining price-cost margins/profitability (63%), Weakening of demand (62%); Retaining of the full workforce (61%), Costs of deployed workforce (60%), Payment of wages/salaries to workers/employees (55%), Repayment of loans/payment of EMIs (53%), Costs of capital (52%) and Costs of compliances (51%).
Although the challenges are multifaceted, the survey found that companies are prioritising vaccination of employees (73%) as one the key strategic plans/ focus areas to tackle the situation. Businesses are also focussing on increasing sales volume (64%), increasing the scale of business operations (64%), enhancing competitiveness of business (64%), cut in costs of business operations (64%), enhancing the price-cost margin (55%), focusing on innovation, research & development (55%), enhancing business operations in the domestic market (55%), reducing the workforce in business operations (45%), and enhancing business operations in the international market (36%).
“Coronavirus 2.0 induced restrictions in the country have created a difficult time for the industry. The entire economic activity is severely impacted with the closure of offices and shops,” opined Sanjay Aggarwal, President, PHD Chamber of Commerce and Industry. “The supply chain disruptions are causing skyrocketing commodity prices, which have severely impacted the price cost margins of the businesses in the difficult pandemic time of coronavirus”.
The survey, which was conducted by PHD Chamber between April and May 2020, involved businesses across the micro, small, medium and large enterprises.
Respondents also rated the relief measures taken by the government to mitigate the effects of the pandemic. According to the survey, 47% of respondents rated the government’s measures at 7 out of 10, while 42% rated the vaccination drive at 6.
Aggarwal urged the government to speed up the vaccination process over the next 2-3 months to cover most of the population. In order to be able to do so, He said, vaccines production capabilities needed be enhanced domestically while also increasing imports from other countries.
“Going ahead, a substantial stimulus to create effective strides for futuristic growth trajectory for Indian Economy and for diminishing the daunting impact of the second wave of the pandemic coronavirus on economy, trade and industry would be crucial to support the economic momentum in this extremely difficult time,” said Aggarwal.
India’s economic growth in FY 2021 contracted (-) 7.3% mainly due to the stringent lockdown in two months of 2020 to contain the spread of virus. However, this statistical low base effect is expected to provide a good opportunity for India to attain a double-digit growth trajectory in FY 2022, said Aggarwal.