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As India enters 3-week lockdown, all eyes on govt’s coronavirus relief package – India Today

India will be under lockdown for the next three weeks to limit the spread of the novel coronavirus in the country, triggering fears among traders and businesses dealing in non-essential commodities.

During the lockdown period, only shops selling essential commodities such as grocery, milk and medicine will stay open, filtering out any other shops/services dealing in non-essential goods.

Retailers dealing in non-essential goods are now extremely worried about shutting shop for a duration this long as uncertainty rises over the economic impact of Covid-19.

Experts agree that a lockdown stretching three weeks is necessary to contain the virus, which has wreaked havoc across the globe, but the financial impact of the move on small businesses needs to be considered as well.

Major losses likely

Experts have pegged losses caused due to the three-week lockdown at Rs 9 lakh crore, which is almost four per cent of the country’s GDP.

Across industries, businesses are keenly awaiting Finance Minister Nirmala Sitharaman’s announcement on a fiscal relief package.

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Thousands of companies have stopped production activities in India and remain uncertain about future activities.

Commenting on the situation, Arjun Bajaj, Director of Videotex International, said, “We have stalled all our production activities and all of the Videotex International manufacturing units in Noida will be shut till March 31 due to the lockdown.”

“As of now, all the office work which can be accommodated in a home setting is functional. The current shut down has impacted enormously on the industries. Although we are hoping that all industry operations to start as soon as possible, we can get more clarity only after March 31.”

Pushkar Mukewar, co-Founder and co-CEO, Drip Capital, explained that the over 50 per cent of Indian businesses have been impacted severely by Covid-19 and it could take many of these businesses up to three months to return to normalcy.

“The new restrictions on movement within the country will make it even harder for sectors heavily dependent on labour for manufacturing and production, especially in the largely unorganized MSME sector. In the coming months, these firms are likely to suffer a dual shock of supply and demand along with constraints of capital as well as labour,” Mukewar said.

Coronavirus in India: Experts peg lockdown cost at Rs 9 lakh crore

“Without strong financial stimulus, domestic industries are likely to enter a slowdown cycle in the coming weeks, and this will have a clear negative impact on India’s export capabilities in the medium to long term. Policymakers need to intervene urgently to keep businesses running and preserve morale, not only for now but also for the foreseeable future,” he added.

Small businesses suffer big

A report based on a survey conducted by SOLV, a B2B e-commerce platform for Small and Medium Enterprises, indicated that 90 per cent of small businesses interviewed have been negatively affected by the Covid-19 outbreak and restrictions.

All small businesses that took part in the survey have lost 35 per cent business on an average compared to the figures last year during the same period.

Out of the surveyed companies, at least 17 per cent have taken a loan and will not be in a position to pay it back if the business situation worsens.

Small businesses and SMEs engaged in the manufacturing and sale of non-essential goods will also suffer significantly during the period.

Domestic brokerage Emkay said the unorganised sector will be the worst-affected due to the lockdown.

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It said the government’s economic relief package should include soft loans for small businesses, loan restructuring and direct cash transfers to those affected by the restrictions.

Meanwhile, Edelweiss said India has so far lagged behind in terms of policy response to the Covid-19 crisis and said the government needs to come up with a thorough economic relief package that encompasses all affected sectors.

The lockdown may help in reducing the spread of Covid-19 significantly, but the government should quickly implement the economic relief package to cushion these companies as profits continue to dip.

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