Business leaders in India are not optimistic about a quick rebound in the country's economy, with consumer demand, one of its main driver, still subdued as the pandemic rages on.
They are, however, hopeful that the worst may be over for Asia's third largest economy, and say that there are some 'green shoots' coming through.
"There's still a long way to go," says Harkirat Singh, managing director of Aero Club, which owns the high-street shoe brand Woodland, with 600 outlets across the country. "Things are still not back to normal. On average, our sales are about 30 per cent of the normal [pre-pandemic level]."
Woodland's stores, like all other non-essential businesses, remained closed for three months amid the nationwide lockdown that began in March. The brand has reopened its shops in phases as different states eased restrictions at different times over the past few months, as New Delhi pushed to revive economic activity.
Mr Singh hopes for a slight pick-up in sales in a couple of months, expecting people to venture out of their houses a bit more and shop for new clothes and shoes for the winter season.
That hope may not materialise, as India in recent weeks has set multiple records of the highest daily coronavirus infections. The total number of confirmed Covid-19 cases is just shy of 3.5 million as of Saturday. A rise in the infection rate has prompted some states to reimpose restrictions, forcing businesses to taper their expectations of an economic recovery.
India will release official gross domestic product data on Monday for the April-June quarter that will reveal the true extent of the damage to the country's economy by the nationwide lockdown, one of the strictest globally.
Japanese investment bank Nomura is projecting the Indian economy will contract 15.2 per cent in the second quarter on an annualised basis, down from 3.1 per cent growth recorded in the first three months of 2020.
Some analysts are even more pessimistic about the impact of the pandemic, with ratings agency ICRA forecasting a 25 per cent quarterly contraction in India's GDP.
Nomura expects Indian GDP to continue contracting over the next three quarters, shrinking 5.6 per cent in the July-September quarter, 2.8 per cent in the fourth quarter of 2020 and by 1.4 per cent in the first quarter of 2021. Overall, the Indian economy will contract 6.1 per cent in the current April to March financial year, its first annual contraction in 40 years, according to the investment bank.
However, despite the overall negative picture, there is some evidence of economic activity picking up momentum slowly as “indices across sectors continued to inch higher in July, suggesting the post-lockdown recovery progressed [early in the] third quarter”, Sonal Varma, managing director and chief economist at Nomura, says.
Amuleek Singh Bijral, the co-founder and chief executive of Chai Point, an India tea retail chain, echoed the positive sentiment despite mounting challenges.
“We are seeing green shoots emerge,” Mr Bijral says. “We have about 60 per cent of 175 stores open and the delivery business is back to pre-Covid level.”
The pick-up in business, he says, was helped by measures taken to adapt to the crisis, he explains.
“We have launched many tech-enabled initiatives for the safety of our staff and customers,” says Mr Bijral. “Our latest rollout is a WhatsApp-based contactless ordering [system] across dine-in, delivery and takeaway. For us, the new game is all digital.”
Businesses were feeling the pinch even before the pandemic as India's economy, after stellar growth for years, was slowing down amid weak private investment and consumer demand. Covid-19 just added fuel to the fire.
“There is no business or enterprise that has remained unaffected after [the] Covid-19 outbreak and lockdowns,” says Surya Suri, director at Steele Collection, a Delhi-based men's luxury fashion wear brand.
“It was an addition, that too a major one, to the sea of challenges that impacted businesses,” he explains. “We had to defer our expansion plans due to the pandemic, which included launching exclusive stores in India as well as abroad.”
Like the rest of the world, Indian consumers are now adapting to the “the new normal” in the Covid-19 era, he says.
“There is no denying that the economy has a long way to go before the losses are recovered, but at least a start is in sight now, and the initial impact of it will be seen in near future,” says Mr Suri. “I foresee things getting back on track and better than the last few months.”
To help support the economy, the Indian government announced a $22 billion (Dh80.74bn) stimulus package in March, along with measures including credit support for small businesses. The Reserve Bank of India also made two emergency interest rate cuts and declared a moratorium on loans to support support businesses and financial markets.
However, with consumer demand recovering more slowly than initially expected, analysts say one in three small businesses may be forced to shut down.
Larger companies and manufacturers, equally affected by the loss of domestic customers, are facing the additional challenge of labour shortages.
Millions of migrant labourers left the big cites such as Mumbai and New Delhi for their native villages when the lockdown came into effect, rendering them jobless.
Supply chain interruptions have been another hurdle for businesses, as restrictions on movement in some states have made it more difficult to secure goods and raw materials.
To offset falling revenue and profitability, businesses have looked to reduce costs including cutting jobs and salaries over the past few months. The country's unemployment rate stood at 9.1 per cent in the week to August 16, according to data from the Centre for Monitoring Indian Economy, down from 27.1 per cent for the week ending May 3.
The festive season in India is around the corner, giving consumer-driven businesses some hope of an improvement in demand. Indian businesses traditionally see a boost in sales during festivities, peaking with Diwali, which will be in November this year.
The biggest question, however, is how much celebration the government will allow and whether India is able to control the surge in the pandemic by then.
“I don't know how the festivities will be [this year],” says Mr Singh. “Recently there was Eid and we didn't see much movement [in business]. It will not be the normal festivities [of past years]."
The travel and hospitality sector is perhaps the worst affected in the wake of the pandemic. With the easing of restrictions, there is some activity, but a full recovery is a long way away, says Pranav Maheshwari, the co-founder of Mumbai-based Vista Rooms, a luxury holiday homes start-up.
“Like the rest of the sectors, we were hit hard with the lockdown and restrictions on travel for the first 120 days – we had almost 100 per cent cancellations,” Mr Maheshwari says.
Business, he adds, is starting to “come back”, but it is only about 40 per cent of its pre-Covid-19 level.
With international travel still largely restricted by the government, Indians are travelling domestically, which is benefiting companies such as Vista Rooms.
“These are the early [signs of recovery], I would say,” adds Mr Maheshwari. “[There is] a lot of pent up demand [for travel in India].”
Though the company had to invest in sanitisation equipment and the training of villa attendants to curb the spread of the virus, Mr Maheshwari says this is a one-time expense he had to book for the safety of his staff and guests.
The one bright spot for the economy is the agriculture sector. A good monsoon season this year has given farm production a boost.
“Farm profit per hectare for field and horticulture crops is expected to increase 3 to 5 per cent in [the] kharif season 2020, supported by higher crop acreage, expected improvement in productivity, and government support,” according to a new report by Crisil.
Agriculture accounts for about 15 per cent of India's GDP.
The government's recent measures to support the sector, which include an infrastructure fund and guaranteeing minimum prices for crops, “are going to be very positive for the sector and agriculture prospects look pretty optimistic”, says Sandeep Malhotra, the managing director of IFFCO Kisan, which provides information and advisory services to farmers.
“The harvest is expected to be good and it could be the best performing sector in the Indian economy,” he adds.