Small shifts, automated production to restart manufacturing?
NEW DELHI: A discussion has begun within a section of the government about multiple ways to resume economic activity, particularly in manufacturing , in a limited way after the end of the closure to allow companies to pay wages and cover operating costs and to ensure that the economy does not unfold and freeze.
Although the discussions are preliminary, and the result will depend on coronavirus threat levels, there is a lot of thought about allowing reduced changes with social distancing , allowing automated production such as cars and establishing a work pass regime and companies that offer dedicated transportation to their workers.
In case of automated production lines, it might be easier to commence operations given there are fewer number of hands on the floor and it is easier to observe social distancing . At the same time, it is essential to devise ways to get textiles and some of the other large employment generating sectors running to reduce likely economic hardship.
Measures are being considered even if thinking about the next economic package can wait for a more comprehensive assessment of the national and international. COVID-19 fall out. Immediate priority, relief to the poor and relief from tax compliance for individuals and businesses, has been addressed for now, it feels.
Officials suggested that such factories will have to make sure that workplaces are not crowded as it cannot continue to operate as usual until the pandemic is brought under control. But the arrangements can be resolved in such a way that 30 to 40% of workers are allowed so that at least part of the production cycle can begin. This will help keep supply chains moving, primarily for common consumer goods.
This will also mean the movement of goods in some of the sectors, although the demand for products such as automobiles may be limited. While there are suggestions that some of this can be stored, for companies, carrying large inventories will place an additional financial burden.
There is a proposal to allow exporters, who have already received orders, to complete production and ship them to ensure that they fulfill their contractual obligation and are not prohibited from future contracts.
In fact, some companies that have generally agreed to pay wages for March will find it difficult to continue to meet the cost of wages as their earnings stop. In fact, sectors such as tourism and hospitality are starting the month with zero business and maintaining operations without sales will be difficult. Even some of the largest companies in the consumer goods area are only running 15-20% of the production chain, which are part of the essential goods setup, industry sources said.
Furthermore, disruption in the supply chain even for food and beverage processing companies is delaying operations.
While large companies can maintain their operations for a longer period, smaller companies do not have deep pockets to maintain their operations without any income for long. The decision to pay the EPFO bill for those earning less than Rs 15,000 in units employing up to 100 workers is expected to cost Rs 20,000 crore annually, leaving the government with no margin to bear the cost of the entire workforce. .
In addition to workers, banks and other lenders must also be paid to ensure that there is no accumulation of bad debt affecting the stability of the financial sector in the medium and short term.