New Delhi: As the nation tries to fight the second wave of the pandemic, which has brought with it a record number of infections and fatalities, the PHD Chamber of Commerce and Industry conducted a quick survey to assess the impact of the current situation on industry.
The survey, which was conducted across 34 sectors, revealed that 73 per cent of the respondents were struggling with the rising cost of raw materials as restrictions in many parts of the country have impacted the pace of economic recovery with an uncertain economic environment, disruptions in supply chains and contraction in demand.
Other key challenges faced by businesses are availability of working capital (64 per cent), Maintaining price-cost margins/profitability (63 per cent), Weakening of demand (62 per cent); Retaining of the full workforce (61 per cent), Costs of deployed workforce (60 per cent), Payment of wages/salaries to workers/employees (55 per cent), Repayment of loans/payment of EMIs (53 per cent), Costs of capital (52 per cent) and Costs of compliances (51 per cent).
Although the challenges are multifaceted, the survey found that companies are prioritising vaccination of employees (73 per cent) as one of the key strategic plans/focus areas to tackle the situation. Businesses are also focusing on increasing sales volume (64 per cent), increasing the scale of business operations (64 per cent), enhancing competitiveness of business (64 per cent), cut in costs of business operations (64 per cent), enhancing the price-cost margin (55 per cent), focusing on innovation, research & development (55 per cent), enhancing business operations in the domestic market (55 per cent), reducing the workforce in business operations (45 per cent), and enhancing business operations in the international market (36 per cent).
"Coronavirus 2.0 induced restrictions in the country have created a difficult time for the industry. The entire economic activity is severely impacted with the closure of offices and shops," said Sanjay Aggarwal, President, PHD Chamber of Commerce and Industry. "The supply chain disruptions are causing skyrocketing commodity prices, which have severely impacted the price cost margins of the businesses in the difficult pandemic time of coronavirus".
The survey, which was conducted by the PHD Chamber between April and May 2020, involved businesses across the micro, small, medium and large enterprises.
Respondents also rated the relief measures taken by the government to mitigate the effects of the pandemic. According to the survey, 47 per cent of the respondents rated the government's measures at 7 out of 10, while 42 per cent rated the vaccination drive at 6.
Aggarwal urged the government to speed up the vaccination process over the next 2-3 months to cover most of the population. In order to do so, he said, vaccine production capabilities needed to be enhanced domestically while also increasing imports from other countries.
"Going ahead, a substantial stimulus to create effective strides for futuristic growth trajectory for Indian Economy and for diminishing the daunting impact of the second wave of the pandemic on economy, trade and industry would be crucial to support the economic momentum in this extremely difficult time," said Aggarwal.
India's economic growth in FY 2021 contracted (-) 7.3 per cent mainly due to the stringent lockdown in two months of 2020 to contain the spread of the virus. However, this statistical low base effect is expected to provide a good opportunity for India to attain a double-digit growth trajectory in FY 2022, said Aggarwal.