Insightful webinar on the impact of COVID-19 & Lockdown

The Covid-19 virus and the economic lockdown imposed to contain its spread presents one of the biggest operational and financial challenges for Indian MSMEs. A sharp fall in the demand post the lockdown and reverse migration of workers has now become a matter of survival for most MSMEs in the industry.

To discuss COVID 19 and its impact on trade, industry & economy Business Standard organised Smart Business Webinar in association with Maharashtra Chamber of Commerce, Industry and Agriculture (MACCIA) on May 15, 2020.

Madan Sabnavis, Chief Economist at CARE Ratings – one of India’s largest rating agencies was the expert speaker. Laying out the economic impact of the COVID-19 he advised MSMEs to focus their financial and organisational resources on surviving through the crisis rather than waste their capital on growth and expansion in the post-lockdown period. “It will take months for the economy to get back to the level of activity seen prior to the lockdown. This means lower than optimal demand for your goods & services, liquidity issues and supply chain bottlenecks. Given this, firms should focus on capital conservation and surviving through FY21 to take advantage of the growth opportunities that will open in FY22,” said Madan. while addressing the participants.

According to him, the economic recovery in the post-lockdown period will be hampered by three factors – labour, liquidity and logistics. “I expect a rise in labour cost as businesses compete for the limited numbers of workers available for work in the post-lockdown period. At the same time, MSME finances will be hit by a general dip in demand and delay in payments by their customers’ especially big companies,” he said. He addded that the logistics and supply chain for the manufacturing sector has been in disarray due to conflicting lockdown rules made at the local levels. “Trucks are not moving, suppliers and vendors are not fully functional, wholesale markets are not fully functional and ports are clogged as there is no labour to load the cargo on trucks. Full-scale manufacturing cannot start in such an environment.” Talking about the stimulus package announced by the central government, Madan said that the Rs.3 lakh crore loan guarantee scheme will help MSMEs tide over the liquidity issues but they shouldn’t expect a quick revival in demand for their goods & services.

MACCIA President, Mr Santosh Mandlecha emphasised the need to look for new growth opportunities that will open for the Indian industry in the post-COVID-19 period. MACCIA Vice-President, Mr Lalit Gandhi said that COVID-19 pandemic and global displeasure at China opens up a great economic opportunity and the government can come out with new policies and programmes to enable India to become a global manufacturing hub.