When you need an answer to any question in the world, refer to Alice in Wonderland. It informs you that answers are overrated. Like when Mad Hatter asks Alice, ‘Why is the raven like a writing desk?’. The author Lewis Carroll later answered with “because it can produce a few notes… and it is never put with the wrong end in front”. So, when will the Indian economy recover? The Mad Hatter’s guess would be as good as ours.
What we do know is that the economy is growing sluggishly — gross domestic product (GDP) has shrunk for six successive quarters till September 2019 — employment is at a four-decade low and investment interest is weak. It does not make for a pleasant, tea-time chat but the pain is for real.
So, as part of our annual sentiment gauging survey, our reporters went to seven industrial clusters — Aurangabad, Surat, Ludhiana, Mandi Gobindgarh, Moradabad, Coimbatore and Tiruchirappalli — to ask SMEs about their performance in FY20 and what do they expect from FY21? Their answers mostly pointed to an economy in a churn, from which only the large and medium enterprises will emerge unscathed, maybe even stronger. The small and micro establishments will need to reinvent themselves urgently, even to survive.
Of FY20, a large share of the respondents — 76% — said that capacity utilisation has been lower than FY19 and 70% said that sales have slowed down. Layoffs have become common; 48% have decreased their staff strength and only 9% raised it. Even historical advantage didn’t seem to be holding anymore, such as seen in Aurangabad and Tiruchirapalli.
In the past, any industrial town that has grown on the back of one large company or industry has managed to insulate itself from a slowdown. But, this time, all are equal in their misery. Aurangabad has grown on the back of B