Covid-19: Govt looks at ways to restart business ops post lockdown
The government is working on getting business activity going again, if only in parts, after the lockdown is relaxed, if only in part, even as companies are itching to get going again , and hoping for a stimulus package.
Although the government has not yet taken a final decision on either a complete or partial end to the lockdown, ministries have started preparing for the eventuality after Prime Minister Narendra Modi on Monday asked them to prepare a list of 10 major decisions and 10 priority areas of focus once the lockdown ends, government officials said.
According to officials, a final decision on this matter is expected next week after thorough assessment of the situation on the ground, and elaborate consultations with stakeholders, including state governments.
Different ministries and departments are preparing for a possible scenario of a partial exit from the lockdown that could permit some economic activities related to manufacturing and logistics, said a finance ministry official who asked not to be named.
“Numbers of Covid-19 infected people are still rising. If this continues, lifting the lockdown is unlikely. But, essential economic activities cannot be held back for long,” the official added.
A second government official said it does not make sense to continue with a complete lockdown. “Purpose of lockdown was to contain spread of the virus at stage-II, but it has surpassed that stage and community spread is clearly visible largely because of one misadventure in Delhi. And the shutdown of the economy for long will make economic recovery difficult.”
To be sure, the health ministry continues to maintain that while there is limited community transmission, the number of infections do not suggest widespread community transmission of the kind seen in stage-III of an infection.
Both officials agreed that stocks of essential goods, particularly food, medical equipments and medicines, are not unlimited. There is a need to ensure their uninterrupted supply, which will require efficient management of a supply chain in a sanitised environment – from procurement of raw materials to distribution of finished goods through retail outlets. they explained, adding that such economic activities could be started in a contained environment in consultation with the industry.
Industry associations said the restart of industrial activities will be increasingly difficult if the lockdown continues for longer.
PHD Chamber of Commerce and Industry president DK Aggarwal wanted a stimulus package of Rs 11 lakh crore. “The start will not be an easy task as it will be now from almost ground zero. At this juncture, the industry awaits full fledged support of the government with a significant fiscal stimulus to the tune of at least 5% of GDP which comes to around Rs 11 Lakh crore.”
Federation of Indian Chambers of Commerce & Industry (Ficci) president Sangita Reddy supported PM Modi’s strategies of hotspot cluster containment, phased opening of non-hotspot economic markets and boosting Covid-19 medical support across the country. “This will instil confidence and preparation for the industry, and we stand united in extending support to the ‘Business Continuity Plan’,” she said. The PM on Monday took stock of the situation in a video conference with his ministerial colleagues and senior bureaucrats.
Ranen Banerjee, leader-Economic Advisory Services at PwC India said even a partial relaxation from the lockdown has its challenges of mitigating the risk of community transmission of Covid-19. “Industry/cities will need to organise SOPs [standard operating procedures] on modes of commuting that will allow [social] distancing... Challenges around enforcing these and how to stagger commuters will also need to be thought through,” he said.
Associated Chambers of Commerce and Industry of India (ASSOCHAM) is in favour of a phased reopening to ensure that full economic activity is restored without losing the gains made during the current lockdown. “Business activity should resume at the earliest, to avoid further financial distress,” said ASSOCHAM secretary general Deepak Sood.
According to industry representatives, reorganisation of labour-intensive construction and infrastructure sectors will take about three months after the lockdown is over mainly because of large-scale of labour migration from urban areas to villages. Sandeep Shah, partner at consultancy firm NA Shah Associates LLP said industries such as infrastructure and real estate are going to face shortage of skilled and unskilled workers as many of them have gone back home and some of them will stay back till the monsoons arrive.
“Apart from this, Many industries in the field of entertainment, hospitality, automobiles, retail, white goods, garment, jewellery, real estate, travel and tourism will see insufficient demand for many months and hence, appropriate measures to see that there is no permanent job losses due to lack of demand will have to be worked out,” he addedd.
Niranjan Hiranandani, national president of the National Real Estate Development Council (NAREDCO) said some companies have been able to retain labourers at construction sites. “Their basic needs are being provided for along with due precautions like usage of face masks, regular hand wash using sanitizers and social distancing,” he said adding that in such cases once the lockdown ends, work can restart in such sites with due precautions.
He said, the real estate sector will, however, face a major challenge on the demand side.