More than 70% of Indian businesses expect COVID-19 to have a high or very high impact on them, expecting a de-growth or contraction of business in the current financial year, according to a survey of almost 400 firms conducted by industry group FICCI.
A whopping 84% say their cash flows have reduced. The outlook for the future is grim, with almost 70% of businesses saying it will take more than nine months for the economy to return to normal.
Employees can anticipate hard times, with more than half of the surveyed businesses expected to cut worker salaries, and almost three out of four companies expected to cut jobs over the next few months. “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,” the Federation of Indian Chambers of Commerce and Industry (FICCI) said in a statement, releasing the survey results on Tuesday.
The survey was carried out over the last week in association with Dhruva Advisors, and included 380 businesses across sectors nationwide. Almost 70% of firms say that the measures announced with the government to deal with the crisis are insufficient, while only 7% say they are satisfied.
When asked what help they expected from the government, 44% said tax relief and incentives were the need of the hour.
About a third of firms demanded measures to ease the compliance burden and to create demand. Almost 30% asked for a moratorium on loan repayment and interest payouts.
Companies asked for payroll support for small firms to retain workers and enable them to pay wages, and no-collateral bank loans for additional working capital to ensure business continuity. Statutory payments, including ESI, PF and GST, need to be deferred, they said.
Only 28% of firms said that the pandemic would not have any impact on their tax outgo, boding ill for government revenues over the next year.
“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,” FICCI president Sangita Reddy said.
