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Emerging Issues and Management Strategies in Different Sectors

(With Special Reference to COVID-19)

By- Sidhi Sood

Introduction

Life is what happens when you’re busy making other plans – John Lennon

Due to COVID-19 there is a nation-wide lockdown because of which businesses had to

develop survival strategies in order to keep their financial wheel running. As per the ICRA
rating agency, in FY20-21 India’s growth rate will fall to 2%. In order to refresh connection
with their customers, companies need to respond in different ways such as contactless
engagements, digital excellence. Reduction in employee benefits, this includes few sick
leaves and increase in number of working days hence, “New Normal” or “Next Normal”.

Life is trying things to see if they work – Ray Bradbury

Coronavirus has been declared a Pandemic by the World Health Organization and is like the
black swan whose impact is very huge and had highly unlikely occurrence. For the next three
months approximately 800 low-income families will get food free of cost which includes
pulses, rice and wheat by government. Corona warriors such as doctors, nurses and
paramedics will get medical insurance worth five million rupees. 83 million poor families
will get Cooking-gas cylinders and 30 million senior citizens will get cash transfer worth
$13.31. For the three months 200 million poor women will get $6.65 per month.

We must see countries not only united to beat the virus but also to tackle its profound
consequences. There is a reduction in repo rate by 75 basis points to 4.4% by Reserve Bank
of India (RBI). As per the International Labor Organization, more than about 5.3 million
people will be unemployed at global level. Under the Building and Construction Worker’s
fund, almost around two crore construction workers got financial support worth Rs.2,066
crore. Almost around 20 crore women got Rs. 500 each which sums up to 9930 crores. The
deadlines for income tax returns and filing GST returns has been extended to June. There is a
decreased in interest rate from 12% to 9% on delayed income tax payment. Moreover, the
deadline for linking of PAN card with Aadhaar has been extended to June 30. In order to
provide assistance to various sections of the society around Rs. 30,000 crores had been
released by government.

Figure -1 - COVID-19 Impact on Various Sectors

Education sector

Examinations had been put on hold due to coronavirus outbreak. There will be a decreased by
10-15% in availability of skilled manpower and large number layoffs will take place. Hence,
it will lead to increase in the unemployment rate. Companies will be delaying joining dates of
college students in placements and internships. Admissions in higher education Institutions
will also be impacted badly. And there will be problems in recruitment of faculties due to
issues in cash liquidity as result of delay in fees payment. Worse impacted are public schools
as there will be difficulty in delivering teaching through online mode due to constraints such
as delivery capabilities, technology and digital content and moreover due to closure of such
school mid-day meals are also not delivered because of which poor families are facing
problems. And there is a decrease in global mobility of students as well both inbound and
outbound.
To meet shortcomings of healthcare professionals they promoted as well as introduced basic
healthcare e-learning course for training healthcare professional and support staff. At minimal
cost online entrepreneurial modules. Conducting seminars, workshops, guest lectures,
interactive sessions with industry corporates and exams online and for self-study providing
free enrollments in the online courses as well as sponsoring of courses by college. To
continue classes, platform such as DIKSHA and mediums like T.V & radio are used in rural
schools. For Broadband upgradation, loans must be given to low fee private schools. Paid
leaves to faculties and staff.

Figure – 2 - COVID-19 Impact on Education Sector

Aviation and Tourism

Due to lockdown, there are cancellations on large scale as a result of closure of domestic and
international travel. As per Indian Association of Tour Operators (IATO), it is predicted that
aviation, travel and hotel sector together may made a total loss about INR 85 billion as a
result of ban on foreign tourists. And according to World Travel and Tourism Council
(WTTC), tourism sector will cost USD 22 billion which will result in the loss of 50 million
jobs. In hospitality and tourism industry there is a potential job loss of about 38 million which
constitutes around 70 percent of the total workforce. According to International Air Transport
Association (IATA), loss in the passenger business globally estimated between USD 63
billion (11 percent) and USD 114 billion (19 percent).
In this period of moratorium, there will be no collateral enhancement as well as no loan will
be classified as NPA. For tourism services there will be GST holiday and for next 12 months
there will be waiver from all state government this includes reduction in power and electricity
tariffs, excise and property taxes and deferment of payment. Through publications there is a
promotion of safety and hygiene – detailing safety assessment and hygiene levels of tourist
destinations. Travelers are postponing their travels for 12months.There is increase in credit
allowance for airlines by AAI, oil companies.

Auto and auto components

Figure -3 – COVID-19 Impact on Automotive Sector

Due to COVID-19, customers had been delaying their vehicle purchases and exports are
getting effecting badly due to lockdown. There is already less demand in the Automotive
sector. There are fluctuations in the raw material prices. There is disruption in the supply of
raw materials and critical components therefore, it affected imports. Due to current situation
there is the impact on sales of Banking sector and Non-Banking Financial companies
(NBFCs), hence liquidity crunch in the sector. There is a delay in any new launches by auto
original equipment manufacturers (OEMs). Due to disturbance in supply chain there is delay
in sourcing auto components.

On auto loan there is income tax deduction, therefore attracting more customers. There is
suspension of tax audits hence, building trust. To boost liquidity there is a deferment of GST
payments. For Internal combustion engine (ICE)-powered vehicles there is GST rate cut. On
previously granted licenses and approvals, OEMs and automotive firms are allowed to
operate for next 6 months irrespective of expiry date coming near and there is a repayment
support scheme for MSME dealers. There is extension in the deadline of BS-VI norms.
Scrappage scheme has been fast track in order to incentivize buying of new vehicles.

Chemicals and Petrochemicals

There is a fall in the crude oil prices hence, raw materials are becoming cheap. There will be
slowdown in demand, hence there will be piling of inventory which need to be sell off as
soon as possible in order to meet working capital. There are restrictions at shipping ports and
road movements which causes disturbances in supply chains. Since there are most of MSMEs
they do not have enough buffer to support working capital. There will be a delay in
investments by investors hence planned capacities need to be put on hold.

Loans are given on flexible as well as on favorable term as banking assistance. Promotion of
New CAPEX is done by incentivizing in energy inputs, taxes and logistics. There is addition
in non-fiscal and fiscal benefits as well. In order to prevent downstream manufacturers from
inferior quality imports and dumping, there is review of anti-dumping duties and FTA.

Apparel and textiles

This sector use to give employment to about 45 million people and to huge number of
contract workers. There will be 10 to 12 percent fall in this sector due to epidemic. There is a
reduction in price of cotton around 3 percent while there is rise of about 25-30 percent in
imported MMF. There is a fall of 18-20 percent in production of apparel due to reduction in
global demand. There is decline of about 12-15 percent in production of yarn.

There is reduction in the interest rate and taxation due to profitability crunch to provide
financial support. There is extension of deadlines as well. And for MSME there is loan
facilitation based on credit ratings to keep sector lucrative. As per approval of Remission
Duties or Taxes on Export Product (RDTEP) scheme, there is 5-10 percent concession for the
exporters in order to compensate taxes and unreimbursed levies.

Pharmaceuticals

Due to unavailability of passes, staff is not able to come because of stringent guidelines of
government as a result there is a difficulty in delivery of medicines on time. To fight COVID-
19 pharmaceutical companies are working together with agencies in order to find potential
cure for the virus by testing different combinations of medicines. Most of pharmaceutical
manufacturing companies had committed to continue supply with few disruptions in supply
chains. In order to keep enough quantities available for the domestic market government had
imposed ban on certain things such as surgical masks, special medical devices, ventilators,
essential medicines, sanitizers as well as on critical APIs. PPEs which constitutes mask, glove
are not reaching on time to corona warriors.

Electronic passes are issued to corona warriors in order to avoid inconvenience in lockdown
period. For quick clearances and approvals there is mechanism known as single window
clearance mechanism. For the prevention of counterfeit medicines there is strengthening of
local FDA. There is promotion of digital payment platforms in order to provide contactless
delivery in view of physical distancing. There should be a creation of critical reserve
inventory for APIs and critical drugs for period of three months to meet emergency situation
and hence need to keep it at DCGI or at FDA approved warehouses. Relaxation need to be
given on the export of enough inventory APIs. There must be quick reimbursement of GST as
well as of other levies as applicable. Special permissions for transportation of essential raw
materials and ancillaries needed.

Food and Agriculture

Since there is restriction on inter-state movement due to lockdown therefore prices of foods
and vegetables will fluctuate. There is remarkable decrease in milk demand hence, dairy
farmers are dumping milk and milk products. As per International Poultry Council (IPC), if
lockdown continues there will be no hatching eggs and breeding stock. There is increase in
the cost of production and reduction in the food quality as farmers are compel to store their
produce for long time because of perishable nature of agriculture produce.

In order to ensure stable food production in kharif season there is a free supply of agricultural
inputs by states. There will be spraying on crops by using drones if shortage of workers
continues further. There is the extension of Employee provident Fund as a support to delivery
persons. There should be no hurdle in supplying essential items as a result FASTAG and
current infrastructure of GST must be followed for smooth movement of food items in order
to help farmers and food industry.
Conclusion

Figure – 4 – COVID-19 Impact on Customers

We all are going to experience New Normal where there is digital era which includes online
payments and zero contact delivery. Usage of sanitizers and masks forever in order to prevent
oneself from the COVID-19. Remote working in order to avoid mass gatherings in view of
social distancing. There is the extension in deadlines of filling GST returns and income tax
returns. EMIs are also delayed for three months. Poor families are getting food and gas
cylinders free. Colleges are sponsoring online courses for students. RBI had reduced repo
rate. Companies are delaying onboarding of students in context to placements and
internships. Rural schools are trying to find out a way how to deliver mid-day meals to
students. New launches in automobile industry has been delayed due to liquidity crunch.
Companies are laying off staff and cutting incentives in order to survive in the market. Loans
are provided on flexible terms. There is a fall in crude oil prices. There are fluctuations in the
prices of vegetables and fruits. There are disturbances in the supply chains due to restrictions
imposed on inter-state movements. There is a problem in getting PPEs kits on time for corona
warriors. There is the extension in the Employee Provident Fund to support delivery persons
irrespective of salary drawn.

Figure – 5 – COVID-19 Impact on Consumption

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