On most nights, Arjun Chawla* can be found in one of his three fine-dining Chinese restaurants located in upmarket neighbourhoods of Mumbai, India’s financial capital. But for the past three weeks, he has been forced to swap the noisy chatter of bustling dinner service, for the unsettling quiet of his home.
Like hundreds of millions of people around the world, Chawla is helping to fight the coronavirus pandemic by following the directives of his government to stay home. But in a country of 1.3 billion people, India’s lockdown on all non-essential businesses is proving to be tough for almost everyone.
And while the government has extended some financial help for many of the poorest and relaxed some financial regulations to help the country’s larger firms and banks, small and medium-sized businesses like Chawla’s seem to be falling through the safety net.
“The restaurants are all shut right now, it’s pretty terrible,” Chawla told Al Jazeera. “I’m trying to use the time to experiment on new dishes and have the restaurants deep cleaned. That’s pretty much all I can do.”
But Chawla recognises that he is one of the lucky ones. Unlike most of India’s restaurant and food services industry, estimated by consultancy firm Care Ratings to be worth about $50bn, he owns the buildings that house his restaurants. That means rent – a potentially sizable overhead – is not a concern. But he is continuing to pay his staff of about 200 people on time, and doing so is starting to weigh heavily.
“They depend on me and it’s a priority,” he said, “but it’s a lot of pressure when you have no sense of when things will be normal again.”
The lockdown, in place since March 25 and extended last week until May 3, has led to a sudden halt in demand, and a near-total lack of revenue for many firms even while they continue to pay rents, wages and interest payments. Analysts say the pain for business owners looks set to continue.
The retail sector, largely reliant on consumer confidence and the public being able to leave their homes, is being particularly badly hit. According to management consultants KPMG, it contributes approximately 10 percent of India’s gross domestic product (GDP), the sum value of all the goods and services produced in a country over a given period, and employs approximately 8 percent of the workforce.
India’s aviation and tourism industries, which together contribute nearly 12 percent of GDP is staring at job losses totalling 38 million or 70 percent of their total workforce, says KPMG.
But India’s small and medium-sized enterprises (SMEs) could be hit disproportionately harder than others.
They generate about 30 percent of the country’s economic activity and support 111 million jobs, according to government estimates. Fears are mounting that many such firms could fold under the pressure of an extended lockdown and take much-needed jobs with them. And while many countries have offered financial support to help withstand the shock, including help with wage bills, the central government is yet to offer any direct support to companies.
“The quickly imposed travel ban and then a lockdown was a step in the right direction to contain the outbreak given we still aren’t testing enough,” Priyanka Kishore, head of India and South East Asia at Oxford Economics, a consultancy firm, told Al Jazeera. “But an economic package has not come close on the heels of that,” Kishore said.
“Clearly, given how much activity has come to a standstill, there is more to be done,” she added.
India’s lockdown has been ranked as one of the strictest globally, according to a COVID-19 government response tracker by the University of Oxford. While it may have saved lives, it has also hurt an already fragile economy.
Slightly less than half of the country’s districts have so far reported virus cases, but an indiscriminate curfew has meant the country is losing an estimated $4.6bn a day, according to Mumbai-based Acuite Ratings & Research Limited. It is a high price for a country that was already on a six-year declining growth trajectory and struggling to employ a workforce growing by an estimated five million people a year.
“Even when the lockdown is progressively brought down and sections of the economy start to function again, demand for these sectors will revive quite slowly,” Suman Chowdhury, chief analytical officer at Acuite told Al Jazeera, referring to retail sectors like tourism, entertainment and travel. “We should expect severe disruption for at least another six months, seriously impacting their performance for the current fiscal year.”