THIRUVANANTHAPURAM: It’s almost certain that the lockdown has a disastrous impact on the industry especially hospitality sector and micro, small and medium enterprises (MSME) sector which form the backbone of most economies worldwide. In fact, in emerging economies, 7 out of 10 formal jobs are created by SMEs and formal MSMEs contribute up to 40% of GDP. Kerala is one of the consumer states in the country and its annual GST turnover is about Rs 25,000 crore.
When the country has gone for a 42-day lockdown, the cash-strapped state has already lost Rs 3,000 crore GST revenue. When it is translated to total business revenue, the lockdown loss would be around Rs 50,000 crore in the state. But this is only a tip of the iceberg as the impact of the lockdown is expected to linger in the industry for months even after the country lifts the lockdown on May 3. The actual loss and subsequent consequence would be much more disastrous, feel experts.
“We have to urgently infuse money into the sector to shore up the prospects of the sector, said P Ganesh, former chairman of Confederation of Indian Industry, Kerala. With the lockdown extending to almost 42 days, each business should be urgently provided an additional soft loan equivalent to the existing working capital limit at not more than 7% interest. The tenure of such loans should be a minimum of 5 years with six months moratorium for payment of principal.
The RBI shall make it mandatory for all banks and financial institutions to adhere to such a term loan working capital immediately, he said. In the case of agriculture activities, including animal husbandry, fisheries and food processing, the damage has already been done in terms of loss. But the real challenge the farm sector will have to face in the coming days is related to farm labour. According to P Indira Devi, Director of Research, Kerala Agricultural University, of the 35 lakh migrants in Kerala, around 7 lakh are employed in farm sector and majority of them have either left for their home state or would leave Kerala once the lockdown restrictions are eased. This will have a major impact on the agriculture sector in the coming year, she said.
Hospitality sector is the first affected world over following the outbreak. And it has serious repercussions on Kerala as well as tourism contributes around 12 per cent of the GDP of the state. Confederation of Tourism Industry, Kerala, president EM Najeeb said the lockdown has burnt a Rs 25,000 crore a hole in the economy of the state. We hope that the state will announce its package for salvaging the tourism sector this week itself,” he said.