Coronavirus crisis: India Inc clueless about govt aid; salary cuts & layoffs to continue

With the meeting between Finance Minister Nirmala Sitharaman and Prime Minister Narendra Modi rescheduled for next week, Indian Inc is clueless about the stimulus package at the moment.

PM Modi along with Niti Aayog CEO Amitabh Kant and finance ministry officials held a slew of meetings with industry bodies Confederation of Indian Industry (CII) and Federation of Indian Chambers of Commerce and Industry (FICCI), where they had made detailed presentations on India's economic situation and their demands.

After the first package of Rs 1.70 lakh crore, many sectors were hoping for a similar package from the government but no announcement has been made so far.

CII, in its latest suggestion, had written about the need for stimulus, especially to the Micro, Small & Medium Enterprises (MSME) sector. The industry body had projected India's GDP growth between 0.9 - 1.5% in FY21.

"Given the extent of the damage to the economy from the disruption to business, the GDP growth in FY21 will likely be the lowest in many decades", said Chandrajit Banerjee, Director General, CII.

FICCI, in a statement, said, "unless a substantive economic package is announced by the government immediately, we could see a permanent impairment of a large section of industry, which may lose the opportunity to come back to life again."

A survey jointly conducted by FICCI and tax consultancy Dhruva Advisors said businesses are grappling with "tremendous uncertainty" about their future, across sectors.

With no clarity on stimulus package, industries are clueless about help from the government and layoffs and salary cuts have already begun in some sectors. Vistara, in a statement, said, 30 per cent of its workforce would take compulsory no-pay leave of up to three days, depending on employment grades from April 15 - 30.

OYO, on the other hand, announced pay cuts for its employees. CEO Rohit Kapoor, in an email, stated the company is asking all its employees to accept a reduction in fixed compensation by 25 per cent effective for the April-July 2020 period. He added the company had to take 'hard decision' of placing some employees on leave with limited benefits from May 4 for four months until August 2020.

Big corporates too are not immune to salary cuts. India's third-biggest two-wheeler manufacturer Bajaj Auto has asked its factory employees to take a 10 per cent pay cut as production doesn't resume on 21st April.

Most of the corporates in the nation are hopeful of government assistance, but they aren't solely banking on it, with no clarity yet on the amount of package and the date of the announcement, most companies have started working on their future plans. Experts say salary cuts and layoffs are just the beginning, impact of COVID-19 will be felt for the next couple of months across the country.

(Edited by Vivek Dubey)

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