Reportedly more than 12 crore indians lost their jobs in april as companies across sectors keep urging the government for immediate release financial assistance to survive the Covid-19 lockdown. industry bodies and trade unions, who represent a bulk of these companies, have been persistently requesting authorities for a sizeable financial package to support sectors worst hit by the contagion.
While bank OF INDIA' target='_blank' title='reserve bank of india-Latest Updates, Photos, Videos are a click away, CLICK NOW'>reserve bank of india (RBI) and the central government announced some relief measures earlier, no direct liquidity aid has been announced yet and liquidity remains the biggest issue for all smaller companies, which may cease to exist if some form of relief is not released soon. Unlike bigger companies, which have large cash buffers to support minimum operations during the crisis, smaller ones are running out of cash required for bearing expenses including wage payments.
If more companies continue to face a credit crunch, unemployment could spike exponentially in india besides a sharp drop in the country’s GDP. This could have a direct impact on the country’s recovery as people would have less money to spend an essential facet for jumpstarting the economy.Ratings agency ICRA expects the country’s GDP to contract as much as 20 per cent in the first quarter of 2020-21. There is evidence to show that companies in india have been completely paralysed by the Covid-19 lockdown, and a restart may not be possible without adequate financial support. For instance, India’s manufacturing and services activity have touched record lows in April.
