Some of the strongest economies around the globe are struggling to cope with the situation in the wake of an unprecedented demand shock and a shutdown of all key economic activities that drive growth. Many Indian sectors are now in critical need of a relief package.
Here are 5 sectors in need of urgent help and cooperation from other sectors better position amid the crisis:
The Micro, Small and Medium Enterprises (MSMEs) are literally the backbone of all Indian sectors and often engaged in manufacturing and export activities — two key drivers of the Indian economy.
Today, almost all MSMEs are out of action due to the lockdown, chocking all production activities at major firms across sectors. There are several reports that indicate how MSMEs are reeling under crisis and have no money to pay their employees.
Tourism and Hospitality Sector
MakeMyTrip co-founder and CEO Deep Karla in a recent group interaction told India Today TV that the tourism sector was the first to get disrupted by the impact of Covid-19 and will be the last to see a resumption of activities.
Several reports indicate that the tourism sector will be worst affected due to the virus pandemic.
The government also knows how bad the sector has been hit and acknowledged the same through a press release. A KMPG report from last month had already predicted the Indian tourism and hospitality sector to lose more than over 3.8 crore jobs.
The crucial aviation sector that connects nations across the world is witnessing a flurry of layoffs and pay cuts. Some workers have been asked to go on forced unpaid leaves by aviation companies, who have been hit equally hard as the tourism and hospitality sector.
Each day, there are reports of global airlines announcing furloughs or layoffs as operational strains deepen in the wake of the lockdown.
CAPA India, a leading travel and tourism consultancy firm, said last in a report last month that global aviation activity has sunk over 66 per cent in the wake of the Covid-19 crisis.
“In India, the decline in aircraft movements has been even more dramatic. With the exception of a handful of cargo and repatriation charter flights, India’s skies are largely empty,” the April 2020 report said.
The automobile sector in India has been forced to stop key manufacturing activity and has led to a sharp drop in production and sales.
With most of the plants shut, big automobile manufacturing companies have announced pay cuts and are waiting for a decision on resumption of dealerships.
However, RC Bhargava, an industry veteran and Maruti Suzuki Chairman, told India Today TV how the automobile sector is interlinked with many other small sectors that manufacture key parts, which are then used for manufacturing vehicle components.
Real Estate Sector
Finally, the real estate sector outlook has also suffered immensely due to the lockdown, which was announced to prevent the spread of the deadly Covid-19 virus.
ANAROCK Group in a report last month said housing sales will fall 25-35 per cent while office absorption will fall in the range of 13-30 per cent on a year-on-year basis.
In the long run, such a reduction in commercial and residential property could reset the future of real estate in India, the report added.
Besides, while construction activities have resumed in some areas, there are many hotspots areas in urban areas where key construction projects have been put on hold for several weeks due to the lockdown.
This has led to unemployment among millions of migrant laborers in India, who are engaged primarily in construction activities. Hardly anyone of these laborers, who live on daily wage, have additional savings to see off the lockdown period.
The government has urged employers to not cut wages or lay off such laborers, reports suggest that companies are left with no choice but to let their workers go due to cash flow issues.
The government has announced several relief measures for them, but it is hard to ensure whether the benefits are reaching all.
In such a scenario, the government could announce a job security scheme that covers certain employees, similar to what some countries including the UK have done. While there are the five sectors that need urgent help, the outlook of other sectors in India are also deteriorating.
A larger job security scheme for those who have been laid off could be the only way to protect affected citizens.