Most industries, businesses will collapse if lockdown continues: NRB

Khabarhub

August 5, 2020

4 MIN READ

Most industries, businesses will collapse if lockdown continues: NRB

Nepal Rastra Bank (File Photo)

  • 1
  •  
  •  
  •  
  •  
  •  
  •  
  •  
  •  
    1
    Share

KATHMANDU: A survey conducted by the Research Department at Nepal Rastra Bank (NRB), almost all industries and businesses will collapse if lockdown is re-imposed in the country.

Most of the industries and businesses have been forced to shut down. The report forecast that it will take about 9 months to bring back the businesses to the normal stage.

If the lockdown is re-imposed, industries and businesses that could return to normalcy in nine months will not be able to recover again, the report said.

During the lockdown, around 96.7 percent of the surveyed industries/businesses reported an average decline of 73.8 percent in production/turnover compared to the normal period.

The fact that the average power consumption of electricity has decreased by 83.9 percent used by industries/businesses.

The decline in the production/turnover of many industries and businesses shows a significant decline in economic activities, the survey report said.

The share of fixed expenditure and recurrent expenditure in the total expenditure of the participating industries/businesses was 37.6 percent and 62.4 percent, respectively.

The high share of recurrent expenditure indicates that there will be a problem of working capital for industries/ businesses after the crisis due to lockdown.

According to the NRB, around 4 percent fully operational industries/businesses, 35 percent partially operational industries/businesses and 61 percent fully closed industries/businesses were surveyed to study the impact during the lockdown period.

The report claimed that the closure of most industries/businesses seems to have had a profound effect on the economy.

Education, hotels and restaurants, real estate, rental and business activities, and transportation and warehousing have all been affected.

Domestic industries, small enterprises/small retail businesses and small scale industries/businesses were also affected more than large and medium enterprises/businesses during the lockdown period, the report said.

The report also stated that the industries/businesses participating in the survey cut 22.5 percent of their staffers/workers during the lockdown period.

More than two-thirds of the cuts are temporary/contract workers. The hotel and restaurant sector has seen the most staff cuts. During that period, domestic industries and small enterprises/small retailers have lost more workers than others. ‘

The survey report states that the industries / businesses participating in the survey have cut their salaries by an average of 18.2 percent during the lockdown period.

In addition to this, the allowances and other facilities being provided to the employees / workers have also been significantly reduced.

Hotels and restaurants, transport and storage, and education are at the forefront of salary cuts. Similarly, large industries/businesses have seen a higher percentage of salary cuts than others. ‘

The report states that most of the industries/businesses participating in the survey will continue their current business after the closure, but some of them even want to sell or close their businesses.

Some domestic industries, small enterprises/small retail businesses and small industries/businesses are seeking closure.

Most of the industries/businesses participating in the survey have been told that if they get loan at 5 percent interest rate as provided by the Government of Nepal in the budget of the Fiscal Year 2077/78, they can fully continue the employment of employees.

According to the survey, the participating businesses in the survey during the lockdown period faced problems such as lack of working capital, difficulty in selling and distributing products and lack of demand in the market.

During the lockdown period, 39 percent of the industries/businesses surveyed were found to be fully or partially operational and 61 percent of the industries/businesses were found to be completely closed.

A total of 674 industrialists/entrepreneurs from 52 districts had participated in the survey.

Just In