If small companies fail to come up. the economy can only edge into a more serious crisis. The effect will percolate down to massive loan repayment defaults, dragging the lenders’ feet also into crisis.
The calendar 2020 wasn’t inspiring. except to select drug companies. mostly multinationals. Everyone had a big hope as the Old calendar opened. as usual But in business, things were not so good for small businesses even before the hit of the pandemic. They weren’t fully out of the woods. Many of the small business units hadn’t fully recovered from the impacts Of demonetization and compulsion to migrate into the post-GST era. Still. they all might have anticipated a turnaround by the fag-end of the year 2020.
But everything turned topsy-turvy before the first quarter of the calendar 2020 turned its page, thanks to the lockdown for many months. Three months after the lockdown the country’s GDP lost roughly a quarter.
Every business unit. from a tiny- pan-shop, idol-making, taxi- operators. beauty-parlour to street vendors had to lock down their businesses for months to depend on grains supplied through the public distribution system, For them, life was miserable, as no package was enough for their survival Six months later. some units started reopening. Some never could. Some like idol-makers found no use of lifting the lockdown since their business time for the year was over. Every February 2021 seasonal business suffered irrecoverable losses.
The suffering of migrant workers was inexplicable. In many of my blogs throughout last summer. I did cast a picture that I saw on either side of the highways. A horrendous exodus Of migrant workers from cities to their villages by foot. Virtual chaos. Much dirt has flown under the pandemic bridge thereafter The rate of unemployment rose unprecedentedly.
Many companies found their overhead cost pinching them. For their survival. they had to take harsh measures ordering highly- paid workers to go either sabbatical or look for better prospects Survival of business is more important to accommodate at least the remaining workers. Job loss may be temporary. as the economic boom holds the potential to reabsorb the dis-placed workers. It all depends on how the government supports small companies to come up.
If small companies fail to come up. the economy can only edge into a more serious crisis. The effect will percolate down to massive loan repayment defaults, dragging the lenders’ feet also into crisis. Lenders obeyed government orders to lend to even those who couldn’t pay up earlier Though that is a good gesture, creating an environment that enables small businesses to come up is a big challenge. Now what is driving the morale up is the prediction of recovery at a rapid pace. A simple prediction of growth alone cannot boost the morale of businessmen, who are heavily wounded in the lockdown. Based on the natural principle that every action reacts. it is now predictable that after a long downtrend. things have to look up.
The government has already reported a roaring tax collection, which may not be a pent-up growth. The first quarter Of the Calendar year may see the ground is set for growth. as people have started returning to a normal life without fear If nothing unforeseen happens negatively. by the middle of the calendar. one can anticipate the overall economy to rebound.
Let us not look at the numbers of GDP tax collection and capital investments alone. we need to see how micro-businesses stabilize under a sustainable atmosphere after suffering a deep wound. The year 2021, hence. has to be a period of healing the wound I don’t know whether some wounds can ever be healed. some micro-businesses and workers continue to suffer the adverse impact of the lockdown.
Still, let’s not lose our hopes. People hope the year 2021 to correct the patches left by the pandemic of 2020 Safe anticipation is that the year 2021 may be a mixed year with Some more months in 2021 set to witness the correcting phase, It may take another three months to settle the storm, that too if the government ensures that no business is loaded with new tax liabilities in the Union budget that is expected by the beginning of February 2021.
The wound left by the pandemic induced lockdown hasn’t still fully healed. Many workers are still displaced owing to the inability of small business units to reabsorb them. The delay in the survival of small units may harm the quality of banks’ assets, hence leaving multiple impacts on the economy. If policymakers act prudently and bureaucrats co-operate, the year 2021 may heal the lockdown wound of last year
Many companies found their overhead cost pinching them. For their survival, they had to take harsh measures ordering highly-paid workers to go either sabbatical or look for better prospects