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DR. TULSI GIRI GOSWAMI ARPITA 2019MCOM002

Issues and Challenges of National Lockdown For

Indian Business Organization

Out of all the economic shocks, consumer hysteria is the most lethal.
Since the global outbreak of coronavirus (Covid-19), the panic and
fear among the public throughout the globe is spreading faster than
the virus. This coronavirus lockdown has hit hard the business
organizations. The impact is not only limited to demand side of the
market, but the supply chain is also hampered equally. Throughout
history, a pandemic has had a negative impact on business across all
levels.

In India and around the world, the impact of this coronavirus

lockdown is not limited to a few sectors but is evident across all the
stakeholders of the economy. For instance, the venture capital
activity in the Indian ecosystem has witnessed a slowdown as social
distancing and self-isolation is hampering investor meetings.
Similarly a negative impact is evident across both the white collar
and the blue collar sector. Most people across the country are
fearing for their jobs given the current crisis due to the coronavirus
pandemic. The economic meltdown, unemployment and liquidity
crunch have had a negative impact on almost every sector, but the
travel and tourism industry seems to be the most-affected. The
cascading effect of the coronavirus is crippling the Indian tourism
and hospitality industry.

The travel and tourism industry was already hit by the economic
slowdown in 2019, coupled with macro challenges and geopolitical
issues. And then came the COVID-19 pandemic that didn't take
much time to shut the entire world down.
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DR. TULSI GIRI GOSWAMI ARPITA 2019MCOM002

LAYOFFS LIKELY

According to the World Travel and Tourism Council India Initiative

(WTTCII) and the Federation of Associations in Indian Tourism and
Hospitality, the coronavirus pandemic could leave over 38 million
people jobless, which is approximately 70 percent of the total
tourism and hospitality sector workforce. Not just mass
unemployment, the extended national lockdown could lead to
bankruptcies and closure of numerous travel firms. The current
scenario is bad, especially in the aviation industry as airlines have
had to shut operations. Experts suggest that in the coming two
quarters, around 40,000 jobs could be lost.

CASCADING EFFECT ON TOURISM

The Centre for Asia Pacific Aviation India (CAPA India) has said
that India's aviation industry, excluding Air India, will incur losses
of up to $600 million in Q4FY20. If the government does not
intervene, several Indian carriers would have to shut operations by
May or June due to lack of liquidity, the report warned. Foreign
tourist arrivals (FTA) last month dropped 9.3 per cent month-on-
month and 7 per cent year-on-year, according to government data.
In February 2020, there were 10.15 lakh FTAs, against 10.87 lakh in
February 2019 and 11.18 lakh in January 2020. Of the total losses,
the organised sector in the industry -- branded hotels, tour
operators, travel agencies which are the mainstay of the sector -
may be hit the hardest with an estimated loss of around Rs 1.58 lakh
crore, according to Confederation of Indian Industry estimates. The
industry body has said that branded hotel groups are set to lose as
much as Rs 1.10 lakh crore, online travel agencies Rs 4,312 crore,
tour operators (inbound and domestic) Rs 25,000 crore, adventure
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DR. TULSI GIRI GOSWAMI ARPITA 2019MCOM002

tour operators Rs nearly 19,000 crore and cruise tourism Rs 419

crore.

Stocks related to the industry have shed over 70 percent of their

gains this year.

Inter Globe Aviation and Spice Jet slipped 38 percent and 72

percent, respectively. Hotel stocks like Indian Hotels has lost 50
percent of its share value, while Chalet Hotels, EIH and Lemon Tree
Hotels have shed 47 percent, 61 percent and 67 percent,
respectively.

Industry associations have expressed concerns over falling

businesses and said that if the impact of the pandemic is not
addressed immediately, it could stretch over for years and revival of
jobs will become almost impossible. The impact of the deadly
outbreak is already being witnessed as job losses and layoffs have
started in the sector. Business has literally come to a standstill and
everyone is bleeding in an already challenging business scenario. Even
if the Covid-19 cases decline, the recovery will still take at least 8-
10 months. Private stakeholders alone will not be able to recover
without financial relief from the government.

It has been estimated that the larger tourism industry in India

contributes to about 10 per cent of the GDP. It may not be an
overstatement to assert that almost all of this revenue may dwindle
to a painfully negligible amount if Covid-19 does not come to a halt
this year.

Several tourism, hospitality and aviation industry bodies have also

written to the government for interim relief to pay EMIs,
installments, taxes, and salaries to employees. The road to recovery
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DR. TULSI GIRI GOSWAMI ARPITA 2019MCOM002

for the industry is surely difficult, at least for the next fiscal. We
are likely to see numerous other trends emerge in the way business
is conducted and in human behavior. A lot is about to change in a
world gripped by this coronavirus lockdown.