Video editor: Kunal Mehra
“The biggest worry that we are facing right now is the spectre of massive unemployment. The food services sector employs about 7.3 million people. Even with a conservative 15 percent to 20 percent job cut, we are talking about 1.5 million Indians going jobless. That’s a massive problem.”Anurag Katriar, President, National Restaurant Association of India (NRAI)
As restaurants across India remain closed due to the coronavirus crisis, the industry is bracing for unprecedented loss and layoffs.
Riyaaz Amlani, CEO of Impresario Handmade Restaurants, stresses on the urgency of the matter, “We are really looking at a very grim situation. This is the time for the government to take bold measures and provide the necessary impetus. If the government does not step in quickly and offer relief we are estimated to see a job loss of at least 1.2 to 1.3 million people in the next month itself.”
Amlani adds, “If there are any further delays, we are looking at a complete erosion of jobs in the industry as the industry will collapse. We still don't know when we will see the end of this, and when the light at the end of the tunnel will be visible.”
What kind of loss is the industry looking at, we ask Katriar, head of one of the leading restaurant associations, NRAI.
“This business in the organised sector is worth about Rs 1,75,000 crores. And considering there is about 50 percent of our revenue that is going into fixed expenditure, we are talking about losses of close to Rs 85,000 to 90,000 crores. That’s massive for a sector of our size or for that matter, any sector.Anurag Katriar
On Friday, 27 March, RBI provided some much-needed relief by allowing a three-month moratorium on all term loans, but what else is the industry demanding from the government?
Ankit Mehrotra, Co-Founder & CEO of the online restaurant reservation platform Dineout, has launched an online petition seeking the Finance Ministry’s assistance for the sector to tide over the crisis, “At this point of time, a regular cash-flow and sufficient government aid are two of the most essential factors restaurants need to sustain themselves. We’ve started a #ReliefForRestaurants petition (on change.org) requesting the Ministry of Finance to help restaurants with employee pay cover, deferring of rental & utility pay, moratorium for upcoming statutory dues and more.”
Demand 1: Deferment of Statutory Dues
Riyaaz Amlani: Currently, what we are facing is actually a problem of cash flows. We don't have enough cash flows to pay our expenses and get back into normal business. So, what we really need right now is assistance from the government, and help us through our cash flows, because we're not looking for any handouts. All we need right now is a deferment of collection of all statutory dues, whether it is in the nature of income tax, GST, VAT.
Anurag Katriar: Please spare that cash for the business, so that we can take care of our employees, small suppliers and contract employees.
Demand 2: Restore Input Tax Credit on GST
Anurag Katriar: It's absolutely important that the government restores input tax credit on GST for the sector. What it has done is that all these fixed operating expenses - like rentals and a few other things, like hiring of any services, consultant... they all attract 18 percent GST with no input tax credit. It is an additional fixed burden that we are incurring. Please spare us that.
Demand 3: Relaxations on Rent
Gauri Devidayal, Director of Food Matters India: Of course, landlords are also going to be affected, considering that rent is one of the biggest fixed operating costs of our business. And while we recognise that our landlords will have their own liabilities, the reality is that meeting rent payments is going to be a massive challenge for our businesses. So, if the government can provide some kind of respite on that front.
According to Katriar, “These are the little stimuli that we definitely need to just stay afloat. It's not a matter of profiteering at the cost of others. It's a matter of survival. Despite all this, the sector will still see massive losses. But that will be of manageable levels. Help us survive, help us ensure that so many entrepreneurial dreams are not shattered and millions of jobs are not lost.”
Will the COVID-19 Economic Response Task Force led by Finance Minister Nirmala Sitharaman heed these requests made by the food services sector?