The country’s high performing economic districts should be allowed to play by different rules in the third phase of the lockdown beginning Monday, according to the Confederation of Indian Industry (CII).
In a strategy paper submitted to the Central government on Saturday, CII has called for changes in zone classifications, saying that the 100-150 districts with the highest economic value — identified either through GDP contribution or density of industrial clusters — should be allowed to restart industrial activity, even in containment areas, if stringent rules are followed. It argues that the cost of 100% testing and aggressive health protocols is lower than continued shutdown in these areas.
Biggest problem
In a CII poll of 300-odd CEOs released on Sunday, almost half say an economic recovery will take over a year. More than half foresee job losses. Three out of four participants identified the complete shutdown of operations as their biggest problem, followed by a lack of demand, supply and distribution chain woes, and a credit crunch.
In such a situation, the industry body argued for a calibrated exit from the lockdown in the country’s most crucial economic regions. Within these districts, small restricted areas such as the actual street, mohalla, building or industrial complex where COVID-19 cases have been identified should be treated as containment zones, according to CII’s strategy paper. An area of about 500 metres radius around these areas should be treated as orange zones. The remaining area of the district should be classified as green zones.
CII suggests that full industrial operations can be restarted in these priority districts, even within containment zones, if aggressive door-to-door testing, or group testing covering 100% of the population is carried out, and stringent sanitation and distancing protocols are followed. Personal protective equipment would be provided free of cost for all within the industrial unit. Workers would have to be housed on the premises or within walking distance, and both raw materials and finished goods would be disinfected and kept in isolation for 72 hours before use.
Cost benefit analysis
At the end of the day, the CII argues that a cost benefit analysis favours such an approach. “The cost of undertaking precautionary measures by way of repeated sanitation, wearing of PPE (personal protective equipment), masks, monitoring, group testing etc. will be much less than the economic loss if businesses in such high performing districts have to remain shut for a longer duration,” said CII Director General Chandrajit Banerjee.
The poll of CEOs, the majority of whom belong to the crucial MSME sector, showed that almost two-thirds of respondents expect their revenues to fall more than 40% in the current April to June 2020 quarter. For the full financial year 2020-21, a third of respondents still expect a more than 40% revenue fall, while another third expect their topline to drop between 20% and 40%.
Most of the firms polled expect domestic demand to recover faster than exports. Only 18% do not expect job losses in their sector. Only 35% have faced salary reductions in their own firms so far, but almost half of those say that the duration of their wage cut is undecided.
