The COVID-19 pandemic has severely impacted the financial performance of the corporate sector as prolonged nationwide lockdown and restrictions have taken a toll on manufacturing, construction and industrial activities across the country. ICRA said the impact is likely to be severe and prolonged for select sectors such as aviation, hospitality, retail and allied businesses. The Credit Rating Agency pointed out that despite the nationwide lockdown being lifted, the unabated rise in COVID-19 infections and localised lockdowns in several states have interrupted recovery.
Shamsher Dewan, the ICRA vice president, said rural recovery has emerged as a bright spot supported by two healthy crop cycles. He attributed this to the timely onset of monsoons, healthy reservoir levels and expectations of a healthy Kharif output. “The fact that rural and semi-urban India remained relatively insulated from the pandemic has also aided this resilience, although recent cases of penetration of the virus into hinterlands pose some concerns,” Dewan said.
In May, a study by KPMG said supplies of essential commodities like cereals, pulses, fruits, vegetables, dairy needs to be closely monitored, being dependent on interstate food movement. It said government policies on transport, logistics and e-commerce would have significant impacts on price. “Primary agriculture is vital both in terms of meeting national demand as well as sustenance for farmers, this sector has to be a high priority in terms of usage of agri-inputs like seeds, fertilisers and pesticides. Curbs on migratory labour movement for harvesting wheat, paddy, pulses etc. need to be attenuated. Special attention to rural food production areas will mitigate the macro impact of COVID-19 on the Indian food sector,” KPMG suggested.
According to ICRA’s analysis of high-frequency data points available till July, the trend indicates some encouraging cues of a gradual yet uneven recovery across different sectors relative to the trough experienced in April.