The Covid-19 pandemic has created havoc throughout the world. India has over 4.11 million cases and over 70,000 deaths. The economy of all countries has been affected and the GDPs rates have reached an all-time low. Due to the large population of our country, it has been difficult to take measures to improve the situation. It is not possible for the government to implement 100% compliance.
Import & Export sector
The impact on Industry and trading has been huge. Import and export has come to a halt which has led to a shutdown of these industries.
Other major sectors like software, BPO, KPO, medical transcripts have taken a back foot during these difficult times. Many companies have started pay cuts, reduction of salary, deferment of pay hold bonus and have also discontinued additional staff. As per reports, 33 million people in USA were laid off. All minor and major expansions have come to a halt.
Software entities and big giants like TCS, HCL, Cognizant and others have started working from home. TCS announced that 75% of their 4.5 lakhs workforce will work from home. This gives flexibility of working hours, elimination of transport fatigue and also leads to more productivity. Concepts like piece rate basis and lump-sum basis has also gained popularity. Due to these new norms of work from home, the government is also thinking to regularize this policy as legalized.
Real Estate sector
This new norm of working from home has affected the real estate industry. As employees work from home, premises and offices are redundant and vacant. Businesses are unable to pay rent and have asked owners to reduce the rent. If the big giants vacate their premises, the prices of rentals are going to reduce for the bottom levels too. There will be no demand for new office premises. This will cause a big slump in the real estate business. And there are at least 5000 various industries that depend on the real estate industry. With hundreds of units declared shut, this has caused a huge impact of revenue for the government.
The Government of Maharashtra has announced a reduction of 60% stamp duty for registration i.e 5% to 2% plus more relaxation. But as there is no demand anymore and no new large scale construction work, many contractors will go bankrupt. The poor will become poorer and the rich will become middle- class.
As the government has heavy expenses to take safety measures against the pandemic, there has been a huge reduction of GST to the Central and State governments.
Airline & Hospitality sector:
Due to quarantine and social distancing, Airline and hospitality industry has come to a halt. Thousands have lost their jobs and many restaurants and hotels have closed down. Unemployment and idle manpower has increased at an alarming rate. The food industry is doing much better in comparison.
The Film and Television industry is at a halt. Lakhs of people depend on this industry and are unemployed currently. This has also led to a lot of people taking their own lives.
This Pandemic has had the opposite effect on equipment like masks, industry ventilators, sanitizing industry, alcohol manufacturers which have mushroomed and is in high demand. This has also caused a problem of shortage and hoarding.
The Financial market has been affected as well. Start-ups aspirants are now out of field and demand companies hold cash resulting in no demand of borrowing from banks or markets. Gold has become a rare commodity. People prefer gold as an alternative and see it as a safe investment. Cash flow has reduced to a negligible figure. Many companies are unable to pay interests on deposits made by Public which has been frozen. Due to no increment in salary, that has been reduced and frozen.
The Government has announced an insolvency limit of up to Rs. 1 crore against Rs. 10,000. To reduce the burden on employers, the government has relaxed the PF contribution which has been reduced from 12% to 10% for 3 months which has come as a relief to employees and employers. Further there is a proposal of enhancing the limit of ESI threshold. At present, the ceiling is Rs. 21000/ gross salary which could be enhanced to Rs.30000/. This will only fetch revenue to the government and no relief to employees or employers. This is another extra burden on employer to shell out more money to ESI Corpus. The government may also think of Furlough Leave application which means employers can ask employees to proceed on such leave without pay.
There have been 4 newly formed Wage Code Acts. Each State can form its own rules and get passed in their respective assemblies. This will cause a sea of changes in Labour Laws.
For more information on Labour laws and other changes – click here