Coronavirus Outbreak: Economy suffers 'unprecedented collapse' due to COVID-19, says survey

New Delhi: The coronavirus pandemic is having a “deep impact” on Indian businesses and has already caused an unprecedented collapse in economic activities over the last few weeks, says an industry survey released on Tuesday. The survey, jointly conducted by industry body FICCI and tax consultancy Dhruva Advisors by seeking responses from about 380 companies across sectors, also said that businesses are grappling with “tremendous uncertainty” about their future. Almost 72 percent of the respondents said that the present situation is having a “high to very high” level of impact on their business. [caption id=“attachment_4138761” align=“alignleft” width=“380”] India has not been able to pump up its manufacturing of late. Reuters[/caption] Jobs are also at risk over the coming months as nearly three-fourths of the surveyed firms said they may look at some reduction in manpower in their respective companies, the survey noted. Click here to follow LIVE updates on coronavirus outbreak A substantial majority of the respondents do not foresee a positive demand outlook for their business in this fiscal, with 70 percent of the surveyed firms expecting a degrowth in sales in the fiscal year 2020-21. Moreover, a vast majority of companies also foresee a reduction in their business cashflows and company’s order book. “The survey clearly highlights that unless a substantive economic package is announced by the government immediately, we could see a permanent impairment of a large section of the industry, which may lose the opportunity to come back to life again,” FICCI said in a statement. The industry body further stated that the COVID-19 pandemic is having a deep impact on the Indian economy and members of the Indian industry. The magnitude and speed of collapse in economic activity that India has seen over the last few weeks is unprecedented and there is tremendous uncertainty about what the future holds for businesses and enterprises, FICCI said. Sangita Reddy, President, FICCI, said, “The Covid-19 pandemic is causing deep economic harm and could reverse the gains made in the industrial economy over many decades. There is a need to render immediate and sizable support to industry to protect people, jobs and enterprises." “Industry members are reeling under severe financial stress and are in urgent need of ample liquidity to ensure business continuity. We are hopeful that the government will introduce a series of measures in quick succession to support demand ensure business continuity. This would be a confidence booster and we hope sentiment will improve following the economic package.” Dinesh Kanabar, CEO, Dhruva Advisors, said there is a significant expectation from the government for a financial stimulus and providing liquidity, including by way of tax refunds and cheaper credit, so that the economy returns to normalcy faster. The survey also found that in respect of approved expansion plans, 61 percent of the respondents expect to defer such expansions for a period upto 6 or 12 months, while 33 percent expect to defer approved expansion plans for more than 12 months. Further, while 60 percent of the surveyed firms have deferred their fund-raising plans for the next 6-12 months, nearly 25 percent of the firms have shelved the same. Besides, while 43 percent of the surveyed firms reported that they do not foresee an impact on exports, nearly 34 percent said that exports would take a hit by more than 10 percent.