As the Centre remains undecided about its strategy to exit the lockdown, chief executive officers (CEOs) of top Indian companies have warned the government of an imminent depression in the economy and suggested that firms must learn to work in “new normal” conditions, with a Covid-19 vaccine still some time away.
It has been more than a month since industrial activity came to a virtual halt, after the government announced a nationwide lockdown to prevent the spread of Covid-19.
“The lockdown has had a positive effect in containing the virus. But it’s also imperative to shift focus to economic well-being. We need to rise now to ensure that the economy does not fall into a slumber, which will take huge efforts to awaken. A depression in the economy is also a threat to the nation,” Sajjan Jindal, chairman of JSW Group, said.
Jindal said India needed to find ways to work within the “new normal” to bring the economy back on the track in the shortest period of time.
Experts have sharply revised down India’s economic growth forecast for 2020-21, reflecting the impact of the pandemic. Though the government relaxed rules from April 15 and permitted limited manufacturing and agricultural activity, it is not enough as customers are barred from moving out. Sectors like airlines, automobiles, and hotels are expected to take a big hit for the month of April.
ITC Chairman Sanjiv Puri said it was important to progressively enhance economic activity in the near term with extreme adherence to safety protocols. “It will be super-critical to scale up the agriculture and manufacturing value chains to its optimum capacity at the earliest since it has the largest potential to create livelihood opportunities for many who are today in acute distress,” he said.
Anand Mahindra, chairman of M&M, said if a calibrated lifting of the lockdown meant sequential opening of different parts of the country, then industrial recovery would be painfully slow.
“In manufacturing, if even one feeder factory is still locked, then the final product assembly will be stalled. Research suggests a 49-day lockdown is optimal. If (that’s) true, then after that duration, I believe the lifting of the lockdown should be comprehensive,” he tweeted.
“Containment by exception based on widespread tracking and testing, and isolation only of hotspots and vulnerable segments of the population,” Mahindra added.
Hari Menon, co-founder and CEO, Bigbasket, however, cautioned against “rushing into things”. “It’s time to work on saving the economy. We can’t rush into things. The country just cannot afford another wave of Covid hitting us, which could be disastrous. Hence, we will have to open up slowly and in a very measured way. Thus, the pain is not going away quickly,” he said.
N Srinivasan, vice-chairman and MD of India Cements, said each industry had its own problem in resuming operations as transport was not available to move men and materials. “With financial strain and no income, industry will face enormous difficulty if the lockdown is continued. It will have problems in raising funds from banks and paying salaries in future,” said Srinivasan.
Most Indian companies are strictly following the protocols on social distancing, who should enter factories, and the safety of employees.
While giving full credit to the government for controlling the epidemic, CEOs said at some point of time, the government must reopen the economy. “The government has done a very good job of taking a very firm action. At some point, we need to reopen because livelihoods are at stake. But reopening must be based on statistics and logic,” said TVS Motor Chairman Venu Srinivasan.
CEOs said the rate at which India would reopen its economy had to be calibrated properly. Barring a few hotspots, the doubling rate has come down and states like Karnataka, Tamil Nadu, and Kerala are reporting very low levels of new cases. “Each state will have to take a decision and make sure that it is taken in a logical, science-based manner, keeping public safety and livelihoods in mind,” he said.
R C Bhargava, chairman of auto major Maruti Suzuki, said only the government could maintain the balance between lives and the needs of business and that was what it was doing. “A decision has to taken after broad consultations with all stakeholders and can not be limited to civil servants,” said Bhargava.
The Centre should immediately get into spending mode and create new infrastructure with a budget of at least Rs 10 trillion, CEOs suggested.
“The government must build new assets like roads, highways, power plants, dams, exhibition centres, hospitals, etc. When the government will spend the money, it will push the economy as more cement and steel will be sold,” a CEO said. Demand creation, they said, was the only way forward.
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“This will create an environment where people will want to buy homes and thereby kick-start the spending cycle,” said Vikas Oberoi, CMD, Oberoi Realty.
CEOs said the relaxations allowed by the Centre needed to be broadened. “Even for industries that have been allowed, there are issues on the ground that need to be sorted. The Centre could look at coming out with comprehensive guidelines that can be uniformly implemented by states so that there is no confusion,” SK Roongta, chairman of Balco, said.
Kiran Mazumdar-Shaw, chairman, Biocon, said there was an urgent need for coordinated fiscal and monetary policymaking to tide over the crisis and lay the foundation for a growth revival. “We will need some amount of quantitative easing to enhance liquidity in the economy,” she said.
Vedanta Chairman Anil Agarwal said the government would work towards becoming self-sufficient. “Going forward, we will draw on our strengths, our natural resources and the depth of talent among our people to build capabilities as a nation and fuel the economic recovery process after lockdown,” he said.
Dev Chatterjee with T E Narasimhan, Raghavendra Kamath, Ishita Ayan Dutt, Surajeet Das Gupta & Samreen Ahmad