India reopens economy but workers stay home

Bloomberg

When Bharat Gite reopened his aluminum parts factories in India’s western city of Pune, he spent days servicing idle machines, sanitising his premises and putting in place social distancing norms for staff. As India begins gradually easing stay-at-home restrictions across the country, Gite’s experience shows how reopening economy isn’t going to be a straightforward exercise.
On top of the labour shortages and slack demand, businesses are living with the threat they’ll be shut down for several weeks if a single infection is detected, forcing them to proceed with caution. That dispels any notion of a quick recovery in an economy facing its first contraction in more than four decades and hundreds of millions of job losses.
Small and mid-sized businesses in India account for about a third of gross domestic product and employ more than 110 million people. It’s this sector of the economy that’s experiencing the brunt of the jobs and financial pain from the pandemic and subsequent lockdown.
Even financial markets have suffered due to the curbs.
Stock brokers, especially those with offline presence have struggled to service customers, while restrictions on movement of people have made difficult for mutual funds to verify client information.
In the debt market, the restrictions have led to thinning of volumes and an increase in volatility, prompting the central bank to shorten trading hours in the nation’s bonds and currency markets.
Bond yields on Monday jumped by the most since 2017 as the pandemic forced government to raise its borrowings and abandon budget gap target while the rupee has been among the worst performing currencies in Asia.
India went into a lockdown on March 25, with Modi extending the stringent stay-at-home restrictions twice — first until May 3 and then again until May 17. He began easing curbs last week on the production, sale and transport of goods in areas where virus cases are less severe.