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India reopens economy but millions refuse to budge in face of high risks

INDIA is gradually easing stay-at-home restrictions across the country, but the return to work in the midst of the coronavirus pandemic faces serious difficulties, reports Bloomberg

12 May 2020 - 19:00

INDIA is gradually easing stay-at-home restrictions across the country, but the return to work in the midst of the coronavirus pandemic faces serious difficulties, reports Bloomberg.

Apart from labour shortages and slack demand, businesses are living with the threat they'll be shut down for several weeks if a single infection is detected.



That alone dispels any notion of a quick recovery in an economy facing its first contraction in more than four decades and hundreds of millions of job losses.



'If one person is infected, the whole factory will be closed for 28 days. That is a fear among entrepreneurs,' said Chandrakant Salunkhe, president of the SME Chamber of India, which represents small- and mid-sized businesses in the country.



'Even if I start my factory now, I'll not get raw material. If I have raw material, I don't have labour, and if I have labor I don't have orders. Supply chain has totally broken down.'



When Bharat Gite reopened his two aluminum parts factories in India's western city of Pune, he spent days servicing idle machines, sanitising premises and putting in place social distancing norms for staff.



Mr Gite's big problem now is convincing workers to return to their jobs after millions of Indians fled cities for their rural homes when Prime Minister Narendra Modi imposed a nationwide lockdown at the end of March.



Mr Gite supplies companies like General Electric and Siemens and says sales orders have dried up. The two factories run by his Parc Robotic Systems are operating at a tenth of their capacity and with 30 per cent of labour.



'We haven't heard from customers in the last two months,' Mr Gite said. 'It's totally a havoc situation. We don't know what is going to happen.' The biggest uncertainty is 'how to bring the workforce back,' he said. 'It will take at least a year for the business to come back on track.'



Purchasing managers surveys in the manufacturing and services sectors suggest a 15 per cent contraction in GDP in April, while separate research by a private sector think tank estimates 122 million people lost their jobs



Bloomberg Economics' Abhishek Gupta is forecasting GDP will shrink 4.5 per cent in the fiscal year through March 2021, while Nomura Holdings' Sonal Varma sees a decline of 5.2 per cent.


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