Coronavirus: FICCI's survey highlights ground-level impact on businesses

Devdiscourse News Desk | Sonipat | Updated: 20-03-2020 17:09 IST | Created: 20-03-2020 17:09 IST
Coronavirus: FICCI's survey highlights ground-level impact on businesses
Image Credit: ANI
  • Country:
  • India


  • Over 80 percent of Indian businesses have witnessed a fall in their cash flows, according to a survey released on Friday by FICCI.
  • FICCI also suggested some measures to offset the impact of coronavirus including allowing banks to reschedule payment terms.
  • Nearly 45 percent of the respondents of FICCI's survey felt that it would take 6 months to get back to business-as-usual.

In wake of the novel coronavirus (Covid-19) outbreak, over 50 percent of Indian companies saw the impact on their operations even in early stages and over 80 percent have witnessed a decline in cash flows, says a survey by industry body FICCI.

The country is already experiencing a slowdown in growth. In the third quarter of the current fiscal, the economy grew at 4.7 percent, slowest in six-year. "A significant 53 percent of Indian businesses indicate the marked impact of the coronavirus pandemic on business operations even at early stages," Federation of Indian Chambers of Commerce and Industry (FICCI) said.

The pandemic has significantly impacted the cash flow at organizations with almost 80 percent reporting a decrease in cash flow, the survey showed. The findings were based on interactive sessions and surveys conducted by FICCI amongst the industry members.

"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," it said. It said a combination of monetary, fiscal and financial market measures is needed to help the businesses and people cope with the crisis.

"The Reserve Bank of India (RBI) needs to support the Indian industry and economy at this juncture by bringing down the cost of funds further through a reduction in policy rates, say, by close to 100 basis points," it said. Banks should be given the flexibility to reschedule payment terms without the need for provisioning.

The survey said there is a need to maintain liquidity at surplus levels and provide special liquidity support for any companies/NBFCs/banks that come under strain due to intensifying risk aversion in financial markets or due to large demand shock. With the corporate bond and commercial paper markets are facing liquidity challenges, the RBI should intervene, either directly or through the commercial banking system, to ensure adequate flow of funds into the market.

The government should not cut its capital expenditure plans despite any shortfall in tax collections, it said. It also said the Insolvency and Bankruptcy Code (IBC) should be suspended for a short period for sectors like aviation and hotel, that are severely impacted due to Covid-19.

The survey showed that more than 60 percent of respondents have seen an impact on their supply chains and expect the situation to worsen further.

Nearly 45 percent of the respondents feel that "the situation will come under control by six months," the survey highlighted.

Most of the organizations have brought in a renewed focus on hygiene aspects concerning the pandemic. Almost 40 percent have put in place stringent checks on people entering their offices and disinfection while nearly 30 percent of organizations have already put in place work-from-home policies for their employees, it said.

(With inputs from agencies.)

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