Indian businesses, more particularly the MSMEs, have already been facing tough times continuously since the last few years, there is a global churn. The resultant slowdown was already very humongous and on top of that is this very unprecedented and huge pandemic whose impact is unquantifiable. Yes, it is indeed very difficult to really estimate the economic and financial fall out of this crisis on our nation. This is the fourth article in this COVID19 series, and for the previous articles, please do click here
Even though lockdown may end by April 30, the demand destruction is huge and may take several months for restoration. Most of the businesses are set up based on the business scenario of normal times with some built-in margin of safety. Very few would have planned for such a huge disruption. Very few MSMEs and Indian businesses have Business Continuity Plans. Today the immediate challenge for many MSMEs is just survival.
The Indian Businesses like their global peers are in a precarious situation today and need empathy. It is therefore important for the government machinery and trade bodies to demonstrate their efforts and actions keeping empathy in mind. Otherwise, the efforts will be futile. The help giver and the seeker should not stand on different platforms to perform these actions rather they should collaborate and work towards delivering and receiving solutions.
Presently more mileage and information is being given to the punitive measures that the State will take against the business owners who are unable to pay the dues of the employees in time, without deduction. In these times that are tough and never experienced by any; the business owners need to be considered as partners of the nation.
In the last week of March 2020, there were several welcome directions to the Central, State and Union Territory governments, in connection with the coronavirus lockdown. Under these directions, State/UT governments have to arrange for shelters for the poor and needy (including migrant labourers) and move migrants who had been on the road to reach their home states, into government quarantine facilities.
Many of these directions similarly applied to the private sector as well. One cannot disagree with the humanitarian logic of these directions, but does the private firm be compelled to follow these directions even if it pushes them to bankruptcy or financial ruin? Has anyone even considered the impact that this will have on the nation as a whole?
Business is an important cog in any Nation’s and its Economy’s wheels. It cannot be treated as an item that is used per the convenience of the government of the day. This is a sure-shot recipe for disaster.
Maybe there are a few business owners who will take undue advantage of this situation and harass their employees. The author says “Don't throw the baby out with the bathwater” is an idiomatic expression for an avoidable error in which something good is eliminated when trying to get rid of something bad, or in other words, rejecting the favourable along with the unfavourable.
To reiterate, empathy for Indian Business and coming together on one platform is very very imperative and only then will a truly comprehensive approach be developed. Came across a very relevant press release by Indian Express titled ‘What if the employer becomes unemployed?’ written by Raakhi Jagga. We have reproduced certain portions of the article below for reference:
- The Punjab government had recently said that factories can be opened provided industrialists quarantine their workers inside the units, provide them food and maintain all healthcare standards. If found guilty, their licenses will be terminated. (Author – non-compliance should not necessarily be construed as a guilt. Even the courts of law say that person is not guilty till the person is not given a fair chance to represent his case. Hence, it is required that efforts should be made to understand reasons for inability to comply and then if these are genuine the industrialists should be supported by the government. If not, punitive measures should be graded and if the industrialist complies then okay, if they do not then only license may be terminated. Terminating a license will have much wider ramifications on all stakeholders).
- WITH INDUSTRIES in Punjab being closed amid the curfew, Small and Medium Enterprises (SMEs) have raised concerns as to how to run fixed expenses if the COVID-19 pandemic continues for long. Though they have been asked to pay salaries of employees, power bills without any extension in date, industrialists have asked the state as well as central government as well to support the industry sector, which pays taxes and generates employment. (Author – very apt request).
- The Punjab government had recently said that factories can be opened provided industrialists quarantine their workers inside the units, provide them food and maintain all healthcare standards. If found guilty, their licenses will be terminated. Chawla, who is the owner of Chawla International, said, “My monthly fixed charges are around Rs 4 lakh including salaries, power, EMIs. We are supporting our employees and will support them. But what if the employer goes unemployed?”
Reproducing certain statements from this press report of these MSMEs. Similar sentiments will be there across all industry sectors and regions.
- Chawla has a bicycle parts manufacturing unit and according to him, the bicycle industry of Punjab generates direct employment to around 5 lakh people and hence is feeding around 1.5 crore people (including their family members). “if we go unemployed, what will happen to the economy of the country? The states, as well as Centre, need to think about the industry sector as well like other COVID-19 affected countries are doing.” (I refer some news items reproduced herein later)-.
- Kamal Chopra, general secretary, Offset Printers Association (OPA), Ludhiana, and owner of Foil Printers, said, “I have 30 employees and my monthly fixed expenses including salaries, power bill, and EMIs is around Rs 9 lakh. While countries abroad are supporting industries which generate employment, here, we are being overburdened.”
As this note is being written, the Indian Government is working towards a holistic approach. We hope it is more business-friendly, which ultimately will help the Indian citizens. You can also refer to this article from Livemint!
