Coronavirus: 80% Of Indian Firms See Dip In Cash Flow; 50% Of Businesses Impacted Right Now

Coronavirus: 80% Of Indian Firms See Dip In Cash Flow; 50% Of Businesses Impacted Right Now
Coronavirus: 80% Of Indian Firms See Dip In Cash Flow; 50% Of Businesses Impacted Right Now

The coronavirus pandemic fears have given rise to large downfalls in every sector of employment. Not only has it affected the major sectors of economy like tech and trade but also has shown its footfall in the whole economy.

Just about this week we informed you of the decision to lower the interest rates by the Federal Reserve, in extension to coping up with a series of emergency measures Sunday night. Not just the world economy, the Sensex indexes have been hitting the all time low too on Dalal Street due to the fear-inducing Covid-19 pandemic.

Amid all these pandemic fears, a survey conducted showed that over 50% Indian companies see impact on their operations and nearly 80% have witnessed decline in cash flows.

Coronovirus Shows Effect on India Inc

Not only has the Covid-19 pandemic presented fresh challenges for the country’s economy but also has directly impacted disruptively the demand and supply side elements which have the potential to derail the growth story.

According to a poll conducted by the industry body, Federation of Indian Chambers of Commerce and Industry (Ficci), a significant 53% of Indian businesses indicate the marked impact of the coronavirus pandemic on business operations even at early stages.

The pandemic has significantly impacted the cash flow at organisations with almost 80% reporting a direct fall down in cash flow.

Businesses Fall Short at Cash Flow

Besides the direct impact on demand and supply of goods and services, businesses are also facing reduced cash flows due to slowing economic activity, which in turn is having an impact on all payments including to those for employees, interest, loan repayments and taxes.

As per the industry body, a combination of monetary, fiscal and financial market measures is needed to help the businesses and people cope with the crisis. Banks should be given a flexibility to reschedule payment terms without the need for provisioning.

The survey said there is need to maintain liquidity at surplus levels and provide special liquidity support for any companies/NBFCs/banks that come under strain due to intensifying risk aversion in financial markets or due to large demand shock.

With the corporate bond and commercial paper markets are facing liquidity challenges, the RBI should intervene, either directly or through the commercial banking system, to ensure adequate flow of funds into the market.

The survey shows that over 60% respondents have been impacted in their supply chain and expect the situation to worsen further.

Almost 40% have put in place stringent checks on people entering their offices and disinfection while nearly 30% organisation have already put in place work-from-home policies for their employees.

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