Give us a sense of how deep the distress is? Do you think we have not yet seen how badly industry has been hit?
Corporate results are not necessarily the reflection of what is always happening in the economy because these are larger companies mostly. I think the pain that we have seen is essentially at the MSME level. At the MSME level, if we think about the real pain, hospitality, tourism, and the contact service sectors have really felt the brunt of pain this time. MSMEs had started to get hit not just now with the lockdowns, but also because of the muted demand a few months ago. Their receivables were slower, their raw material prices globally have gone up. That has started to affect their costing as well.
At all levels, MSMEs are the ones that are really getting hit across the board. There is definitely a need for some kind of stimulus for them, be that at any level. It has to be concentrated, it has to be focussed, and it has to be a combination of both state and Centre because there are certain people who cannot be given directly from the centre. So, states have to also step in and do their bit. For micro enterprises, small shopkeepers, the street vendors perhaps some working capital limits to them, some additional direct benefit transfer to them would be very essential to really salvage many of them.
Other people who are really getting hit are also the daily wage workers since there are less number of available jobs or rather in various informal, formal sectors we are seeing that they are also feeling the brunt of the pain. So, some relief for the daily wage workers would also be very critical.
Give us a sense of the sectors which are truly hit and will continue to be hit for some time. What are the ways that these businesses can be helped to even survive?
Certain measures have to be taken. As we just mentioned that they need to be given some kind of a stimulus, maybe some additional – for very small businesses – direct benefit money; like for example the government gave for the Kisan Yojana. Some money goes directly into the hand, that is a survival methodology. However, I think the problems are not just at the services level. Also, we are getting feedback from a lot of our members that at the smaller places the factories have been shut down because now the larger factories are getting shut because they did not have enough oxygen in some cases or they had a lot of factory workers who fell sick.
The job workers, the people who are one level below that are the people who are really facing the brunt, and it is all across. It could be people in the metal industry, it could be people making small pumps, could be people making locks. Every aspect of the business starts getting affected. I think it has to be looked at certainly with a concentration on the industry that has been hit most, but there has to be something that has to happen for everyone; to a great extent at the MSME level.
What are your hopes from the Centre and state combination of relief you mentioned? What are the things that you think state governments can do? Do you think at the state level there is impetus to cut tax rates?
Yes, so that is essentially demand based. Since there was demand for homes, then there was a possibility of those cuts and hence you could drive revenues as well. But apart from some direct relief that the states can give, they should now think about the future. The future is that as we come out of these lockdowns there would be requirement for jobs; unemployment is already starting to move up. The jobs have to get created at the state level as well, which could mean that the states could implement several of the infrastructure projects that have been languishing. States have to build the medical infrastructure of the country, be it hospitals, be it PSA plants, along with those, hospitals increasing the number of beds and encouraging pharmaceutical production.
These are some medium term to long-term measures, but they all have to be start. We have to start thinking about that at that level now because as soon as we come out of the lockdown, there is going to be demand for jobs. The other sector that needs to be protected simultaneously by the state is the agri sector, because so far the season has been quite good. The crop production has been good and we are expecting a good monsoon. To make sure that the impetus remains on agriculture from the supply of fertiliser seeds, so on and so forth, we will ensure that the next — if there is a next wave — we definitely get better prepared for it. So yes, the states have to start looking beyond just the basic stuff, but also for the next stage.
