Coronavirus Pandemic Hits India Inc; Over 50% Businesses Witness Slump In Orders, Cash Flow

While over 50 per cent of the businesses in India are experiencing the impact on their operations, a larger number chunk of such companies stare at massive reduction in orders.

Businesses are facing reduced cash flows due to slowing economic activity. (Representative Image/ Getty)

New Delhi: The deadly Coronavirus has taken a massive toll on more than half of Indian businesses as consumption and demands have already started feeling the wrath even in the early stages of the outbreak in the country, a report by industry body FICCI stated. While over 50 per cent of the businesses in India are experiencing the impact on their operations, a larger number of such companies stare at massive reduction in orders. "A significant 53 per cent of Indian businesses indicate the marked impact of the Coronavirus pandemic on business operations even at early stages," the FICCI survey said. The report also states that nearly 80 per cent of the businesses have witnessed a decline in cash flow as confidence level of consumers has dropped significantly, leading to postponement of their purchasing decisions. "Besides the direct impact on demand and supply of goods and services, businesses are also facing reduced cash flows due to slowing economic activity, which in turn is having an impact on all payments including to those for employees, interest, loan repayments and taxes," the survey said. It also highlighted the fact that combination of monetary, fiscal and financial market measures is needed to help the businesses and people cope with the crisis. "Almost three-fourth of the businesses indicate big reductions in orders. Of these, almost 50 per cent indicate a 20 per cent and more decrease in the orders," it added further. "The Reserve Bank of India (RBI) need to support the Indian industry and economy at this juncture by bringing down the cost of funds further through reduction in policy rates, say, by close to 100 basis points," the FICCI survey stated. Several businesses felt the need for intervention of the Reserve Bank of India (RBI) by supporting the Indian industry and economy at this juncture by bringing down the cost of funds further through reduction in policy rates by around 100 basis points. The pandemic has had a major impact on the supply chains as more than 60 per cent respondents of the survey indicating that their supply chains were affected. The companies also highlighted that they are closely monitoring the situation and expect the impact of the Coronavirus pandemic on supply chain to worsen further. Most of the organisations have brought in a renewed focus on hygiene aspects concerning the pandemic. As per the survey, nearly 42 per cent of the respondents feel that it could take up to three months for normalcy to return. Meanwhile, Prime Minister Narendra Modi on Thursday announced formation of a special 'COVID-19 Economic Taskforce', led by Finance Minister Nirmala Sitharaman, to reduce the impact of Coronavirus and the threat it poses to Indian economy.