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CoronaVirus - National - May 11, 2020

COVID-19 Lockdown: Anxious businesses wait for 17 May exit plan

There is much anticipation about the outcome of today’s call of Indian Prime Minister Narendra Modi with state chief ministers on relaxation, post 17 May 2020.

In a decision taken yesterday, 10 May, The Indian Railway has announced to restart operations in a limited way from 12 May. The decision follows after the Union Health Minister Dr. Harsh Vardhan that ten states/ union territories have not reported a single case of COVID in the past 24-hours.

The lockdown, which has been in place since 24 March, has drawn a mixed response from businesses and analysts. The much anticipated second economic stimulus package is yet to be announced.

Nomura, a leading brokerage firm, has forecast that India’s FY21 GDP would be -5.2%. Earlier, the firm had announced GDP to be -0.4%.

Going by the recent spike in cases in Maharashtra, Gujarat, Tamil Nadu, and Delhi, the government is likely to come up with a negative list of activities. The government has already allowed limited economic activities since 20 April and 4 May.

Many manufacturing plants have started operating. However, significant businesses are likely to work in a limited and restricted way due to social distancing norms. Businesses, especially small and medium businesses, are concerned as public transport is still not operational. The guidelines issued by the government on repeated sanitization has left companies worried. The supply chain is yet to operate in its full capacity. Multiple guidelines issued by different authorities is also adding to the confusion.

Many medium, small, and micro (MSMEs) businesses fear that due to non-compliance with new norms, they might face inspector visits.

There are serious debates about the resumption of businesses in major urban centres like Mumbai, Ahmedabad, Surat, Delhi, Chennai, Hyderabad, which have also reported high cases of COVID-19.

There are indications that a complete reversal of lockdown is unlikely after 17 May, as the hotspots continue to report a spike in the number of positive cases. Many health experts believe that India’s COVID cases are likely to hit a peak in June or July.

The lockdown, which started since March, has drawn criticism for insufficient support measures for the weak and marginalized, migrant labourers. The government had to dilute lockdown measures amid growing criticism. Leading auto manufacturers have reported zero sales during this period.

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