![]() This has important policy implications for the government who can use the data to devise policies for firms and develop appropriate social welfare benefits for labour. Thus, our exercise not only helps to detect fluctuations in economic activity but the choices firms may make to mitigate the impact. With the threats of mutations on the rise and slow vaccination roll-out in large parts of the developing world, non-pharmaceutical interventions such as snap lockdowns are likely to be utilised. Such an investigation is important to understand the initial response by firms to the pandemic. Further, our data (explained later) also allows us to assess the demand and/or supply channel through which the firms felt the shock and its resultant impact on hiring and wages for skilled and unskilled labour. The objective of this paper is to utilise the lockdown as an exogenous, sudden and uncertain business disruption shock and understand how businesses change under such events. The survey continued in the digital mode as the lockdown was announced and through it as well. The National Council of Applied Economic Research (NCAER) Business Expectations Survey (N-BES from hereon) was being conducted (on-field) in the month of March 2020. ![]() The unlocking of the economy ultimately began in a phase-wise manner in June 2020. While initially, it was planned for a duration of 21 days, Phase 3 of the partial lockdown has been extended till May 17, 2020. In addition to its stringency and suddenness, the horizon of the lockdown also remained uncertain. and places of worship were to remain closed with public gatherings barred (PIB 2020a). Government of India offices & its autonomous/subordinate offices & public corporations State/Union Territory Governments & their autonomous bodies & corporations commercial and private establishments (with exceptions) industrial establishments (with exceptions) transport services hospitality services educational, training, research, coaching institutions, etc. ![]() India had one of the toughest lockdowns around the world with a stringency index of 100 (Hale et al., 2020). The lockdown was extended from Apto (PIB, 2020b). Faced with the difficult choice between lives and livelihoods, the Government of India imposed a ‘sudden’ lockdown on 24th March 2020, effective from 25th March 2020 for 21 days (PIB, 2020a). However, the same measures had a dampening effect on economic activity (Bell & Lewis, 2005 Eichenbaum et al., 2020). Adoption of several non-pharmaceutical interventions known as social distancing measures were supposed to help reduce the transmission of the influenza virus as per historical experiences from previous pandemics (Hatchettet al., 2007). The incidence of the once-in-a-century global pandemic, novel coronavirus (COVID-19) has upended the world as we know it. The lessons are applicable for governments which imposed local lockdowns during the second wave and potential disruption for the expected third wave. This unique study gives insights not only about firms and their strategies but regarding appropriate policy choices during lockdown. Lastly the mitigation strategy of firms involved reducing employment for unskilled workers and wages for skilled workers. ![]() We also find that firms perceive this as a relatively higher demand shock in terms of falling domestic sales post-lockdown whereas supply shocks are perceived to be on the downside. Further, smaller firms showed a relatively higher impact. Using a logit-probability model to analyse data of this natural experiment showed that firms’ 6-months ahead sentiments for its financial condition worsened drastically during lockdown compared to firms surveyed immediately prior to the announcement. The implementation of the COVID-19 national lockdown announced suddenly in March 2020 in India provided a unique opportunity to capture real-time changes in business sentiments during episodes of unexpected and sudden disruptions. ![]()
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