NEW DELHI: India’s retail sector has racked up a whopping Rs. 15.5 lakh crore in losses ever since the lockdown was imposed on March 24, leading many businesses to down shutters as the coronavirus-induced lockdown wreaked havoc on the industry. According to the Confederation of All India Traders (CAIT), which represents around seven crore traders and about 40,000 trade associations, at least 20 per cent or 1.4 crore more retailers are likely to wind up their businesses in the next few months in the absence of any support from the government.
“COVID-19 has caused a huge dent in retail trade with losses crossing Rs.15.5 lakh crore in the past 100 days. Even after 45 days from Unlock-1, there has been no clear-cut improvement,” CAIT Secretary General Praveen Khandelwal said.
The traders’ body has also urged the government to award a substantial package to traders to ensure their survival. Their demands include: Relaxation in payment of taxes, extension in repayment of bank loans and EMIs without any further interest or penalty as well as measures that would provide money directly in the hands of the traders.
In April, the losses stood at about Rs. 5 lakh crore whereas in May it was estimated to be about Rs. 4.5 lakh crore, followed by Rs. 4 lakh crore in June. Losses stood at about 2.5 lakh crore in the first fortnight of July offering a grim snapshot of the effect of the pandemic on consumer spending. “Even as the lockdown was relaxed, store footfall was only 10 per cent. Most of these traders do not have deep pockets to sustain this severe economic catastrophe and on the other hand have several financial obligations to meet. At this crucial time, handholding of these traders is all the more much required,” Khandelwal said.
Retailers have also pointed out that their working capital has completely dried up leaving them even more vulnerable. Payment for goods supplied between December and March to customers on credit has been delayed due to lockdown restrictions, which is now expected to begin flowing in from September, 2020. “The rule of economics describes such a situation, when input is low and the output is high, as unhealthy business eating capital. Therefore, a helping hand from the government is much needed,” the traders’ body said in a statement.
Earlier, the credit rating agency CARE ratings gave the retail sector, which contributes about 10 per cent of India’s Gross Domestic Product (GDP), a ‘Negative’ outlook.
“The impact on demand, which is expected to remain muted at least for the next three four quarters, will be more in case of players with presence in non-essential items and luxury segments,” it wrote in a note. Apart from weakness in discretionary spending on the backdrop of potential job losses and wage cuts across sectors, the rising count of fresh covid-19 cases and the subsequent intermittent lockdown in some of the states to curb the contagion is likely to aggravate the woes of retailers. The resulting job losses will continue to mount.