The lockdown across 30 states and Union Territories to prevent the spread of the coronavirus has brought economic activity to a virtual halt. Transportation and logistics system are struggling to get past checkpoints amid varying interpretations across state jurisdictions of what comprises essential services. The country’s top manufacturing and services hubs are closing offices amid the restrictions. Construction activity across the major metropolitan regions is crimping to a stop.
While the lockdown started with 75 districts that make up about 10 per cent of the country’s population, three-fourths of these figure in the list of 49 high-potential metropolitan clusters that consultancy firm McKinsey & Co has projected will account for about 75 per cent of India’s incremental GDP between 2012 to 2025. The shutdown has since been expanded to 30 states and UTs.
As per the last available Sixth Economic Census, conducted during January 2013-April 2014, of 5.85 crore establishments with 13.13 crore workers in operation across 30 states and UTs, 10 states — Karnataka, Tamil Nadu, Gujarat, Delhi, Maharashtra, Himachal Pradesh, Bihar, Andhra Pradesh, West Bengal, Rajasthan — accounted for 58.2 per cent of the total establishments classified by broad economic activity. Seven of these figure in the complete lockdown list.
No recent official data estimates the country’s unorganised workers, which were according to the last NSSO Employment and Unemployment Survey, 2011-12 were estimated to be 82.7 per cent or 39.14 crore of the total 47.41 crore estimated employed persons. The contribution of the unorganised or informal sector to the economy, according to a National Statistical Commission report of 2012, varies between 48 per cent and 56.4 per cent, most of which have been badly impacted by the lockdown and there is a cascading impact on workers that have no safety net and little means to head back to their home states on account of the transportation blockade.
In the formal sector, the auto sector has been badly impacted. Passenger vehicle market leader Maruti Suzuki has temporarily shut operations at its production facilities in Haryana — Gurugram and Manesar — while utility vehicle maker M&M has announced the temporary suspension of manufacturing operations at its Nagpur, Chakan and Kandivali plants till March 31, 2020.
Hero MotoCorp has suspended production at all its facilities across the world and at its Global Parts Centre in Rajasthan with immediate effect till March 31, 2020. Tata Motors, too, has announced it is rapidly scaling down activities at its Pune facility to skeletal operations and will be ready for plant closure by end of Tuesday and remain in this mode till 31st March and review it in due course.
The wave of shutdowns has now taken a pan-India hue. On March 22, Toyota Kirloskar Motor temporarily shut down its production plant in Bidadi, Karnataka until further notice. Kia Motors India announced a day earlier that it will be temporarily shutting down all operations in Anantapur (Andhra Pradesh), Renault India announced the temporary suspension of all operations at its Alliance manufacturing facility in Chennai, Yamaha suspended its manufacturing operations at its plants in Chennai, Surajpur and Faridabad until March 31, 2020. TVS Motor Company has decided to halt all manufacturing operations at its plants in India and Indonesia till further notice while Suzuki Motorcycles India Pvt Ltd said it had suspended production at its Kherki Dhaula, Gurgaon plant in accordance with the directives issued by the Haryana Government. Hyundai Motor India too has suspended production at its Chennai plant with effect from March 23, 2020 till further notice while Honda Cars India has announced that it will be suspending production at its Greater Noida and Tapukara plants with effect from March 23, 2020.
India Ratings has noted that construction activities across construction hub cities such as Mumbai Metropolitan Region, Delhi, Pune, and Bengaluru are likely to be stalled or progress at a significantly slower-than-anticipated pace for a major portion of March 2020, and may continue in April as well.
In one of the measures announced for the organised sector after the lockdown, the central government has issued advisories to chief secretaries of all states and union territories, employers’ associations and public enterprises, urging all public and private sector employers to not terminate any employment, casual or contractual, and not reduce wages.
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