Interview | Mallika Srinivasan Business

‘We are at crucial point in agriculture, demand for inputs may see pick-up’

Due to the COVID-19 lockdown, companies will take a hit in the first half. However, industries could look forward to some growth in the second half, Mallika Srinivasan, chairman and managing director, Tractors and Farm Equipment Ltd., said in an interview to The Hindu. Edited excerpts

What will be the impact on retail and agri sectors, MSMEs in particular and the economy in general?

No doubt, there will be an economic impact with a close to 0% growth. Let me begin with the manufacturing sector. In our sector, for example, it would take us at least two weeks to ramp up with some loss in productivity, given the health precautions, including social distancing, that would have to be undertaken.

We predict the demand for capital goods, automobiles and trucks all being initially soft after the lifting of the lockdown. The retail sector, FMCGs in particular, can be expected to pick up more quickly given the somewhat suppressed demand over the last few weeks.

In terms of agriculture, we are at a very crucial point in terms of the agricultural cycle. The harvesting of the Rabi crop is on and the timely preparation of the land for the Khariff crop would be critical to agricultural GDP.

The government has been very conscious of this and support is being extended at all levels to try and facilitate smooth agricultural operations through availability of inputs and equipment. I do believe that demand for agri inputs will pick up and if with close monitoring and facilitation by government we can ensure timely completion of agricultural operations, the impact on this sector can be minimised.

The critical policy support we look forward to is in terms of government procurement.

Another crucial area of government intervention would be a larger role in augmenting the storage capacity for agri produce on an emergency basis and making this available to the farmer. This would go a long way in enabling the farmer to get a better price for his crop.

The one real issue that we face with agricultural operations is with respect to migrant labour, especially in some of the northern states. Migrant labour is critical for timely agricultural operations and we need to see how we can slowly increase the confidence of migrant labourers to return to their farm lands after the lifting of the lockdown, as that is the key to keep things going smoothly. With appropriate policy measures and close oversight, the issues in agriculture arising from the lockdown can be effectively addressed.

MSMEs face the challenges of working capital and cash. A moratorium has been given and if this can be extended, including interest, it will provide relief to this sector. Cash flow is a problem irrespective of the size of the industry. Postponement of GST payments by a month and prompt settlement of tax refunds due to all corporates will provide good relief.

How long do you think it will take for the Indian economy to bounce back?

We have lost April. It will take us a few weeks of May to really ramp back and then to overcome the sentiment and get all the wheels of the economy churning again.

From the third quarter, we can look forward to growth. We will take a knock in the first half, with each industry sector ramping up at a different pace. But, I think we can look forward to some growth in the second half. We welcome the measures announced aimed to alleviate the suffering of the most vulnerable sections of our society. We now look forward to a strong economic package aimed at boosting demand and providing relief to businesses.

What is the exports scenario?

In exports, we have both supply side and demand side uncertainty and is challenging. Different countries are in different stages of lockdown and customers face varying degrees of market uncertainty.

The announcement that export incentives will be continued for six months is indeed welcome and our request would be to extend it for a year or more at least to maintain our competitive position in this crisis.

What would be the impact of COVID-19 on the tractor industry?

During 2019-20, we saw an industry drop of 10%. The last two weeks of March were the beginning of a new season and we were expecting a good season.

Good monsoons, and water storage had augured well for the Rabi crop and a buoyancy in demand was expected when the shutdown had to happen.

April to June is a peak season for the industry and if our customers, the farmers, are affected, the industry is being affected too and we anticipate a 10-12% drop during 2020-21. Efforts are on by the government and industry to enable farmers overhaul their equipment and keep them up and running during the critical agricultural season. However, at the ground level, permissions are somewhat slow to come by.

Has there been any cancellation of orders?

While we have not seen any cancellation of orders, there is an element of uncertainty, going forward, with respect to some countries. We have not felt any impact.

Should it be partial lifting of lockdown or total removal?

I think a more practical and safe way of doing the lifting would be to do a planned step by step lifting. Governments, Centre and States have a good grip over problem areas and priority sectors and over what is critical.

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Printable version | Apr 13, 2021 8:12:51 PM |

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