Hundreds of thousands of cash-starved small businesses in India have either deferred or cut their workers’ wages this month, say industrialists and union leaders, amid a 21-day nationwide lockdown to stem the spread of the coronavirus pandemic.
All India Manufacturers Organisation (AIMO)- an industry body representing some 1,00,000 small manufacturers – said more than two-thirds of its members faced problems in paying salaries on Tuesday, the usual day for paying monthly wages.
“We have no funds to pay wages,” said K.E. Raghunathan, former national president of AIMO, who runs a solar parts’ manufacturing unit in Chennai.
“Our first priority is to pay electricity bills, rent, bank loans and social security contributions of employees,” he said, adding that they faced delays in payments from clients, including the government.
Centre and state governments and state-owned companies owe more than $66 billion to small businesses, the government told parliament last month.
The nationwide lockdown, set to end April 14, has left millions of migrant workers stranded without any other source of income. And officials have warned that some states may extend the lockdowns as coronavirus cases rise.
India has so far recorded more than 4,200 coronavirus cases a death count of 114 people.
Beyond delayed payments, exports have also been hit by the pandemic, and companies have faced over 50% cancellations in orders, said Ajay Sahai, director general of the Federation of Indian Export Organisations (FIEO), nearly half of whose members are small businesses.
Among the worst hit are lifestyle products such as carpets, handicrafts and apparel, he said.
Small businesses account for nearly one-quarter of India’s $2.9 trillion economy and employ more than 500 million workers, according to government estimates.
Amarjeet Kaur, national general secretary of All India Trade Union Congress, estimates that more than 5 million workers have suffered a partial or full loss of wages.
India’s unemployment rate rose to 10.4% this week from 7.2% in early February, according to estimates by Centre for Monitoring Indian Economy, a Mumbai-based private think-tank.
Even workers who were able to access some government relief this week faced delays at banks.
On Tuesday, outside a Punjab National Bank branch in Agra, more than 100 people, mainly women, were queuing for Rs 500 subsidy granted by the government during the lockdown.
“I need this to feed my children,” said Gyan Devi, a labourer. “Something is better than nothing.