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India's Mumbai lockdown threatens services

Murali Krishnan New Delhi
April 9, 2021

India's economic powerhouse state, Maharashtra, is at the center of the country's worst coronavirus surge to date. But stopping the outbreak will put the brakes on the fragile recovery of the service sector.

A line outside a Mumbai market, April 4
People waiting in line outside a Mumbai market ahead of a new lockdownImage: Ashish Vaishnav/Zumapress/picture alliance

Maharashtra's sprawling capital, Mumbai, is India's financial and commercial hub, currently contributing 6% to national GDP.

Home to over 124 million people and producing 14% to total GDP, Maharashtra is also the center of India's latest coronavirus surge.

Over the past several weeks, up to 60% of new coronavirus cases in India were reported in Maharashtra. The COVID death toll in the state was 2,100 in the first week of April alone. In the whole of March, that number was 2,495, according to health ministry data.

Maharashtra's 'break the chain' COVID restrictions

To try to stem the rising number of infections, Maharashtra authorities are imposing a series of new restrictions.

There will be a total weekend lockdown in the state, with no movement allowed except for essential services from Friday 8 p.m. (1530 UTC) until Monday 7 a.m. (130 UTC).

A daily nighttime curfew will also be in effect from 8 p.m. to 7 a.m., with only essential services allowed to function.

All types of shops, malls and markets, except those selling essentials such as groceries, medicines and vegetables, will remain closed.

This includes cinemas, multiplexes, theaters, video parlors, clubs, swimming pools, sports complexes, auditoriums, water parks, salons, beauty parlors and spas.

These measures, which health authorities have dubbed "break the chain," are expected to remain in force until April 30.

Service sector set to take a beating

Trader associations and economic analysts say the minilockdown will hit trade, hotels and transport, followed by financial services, real estate and professional services, and public administration.

Nearly 70% of Mumbai's contribution to national GDP is service sector oriented.

"The pandemic's impact on the hospitality industry has already been extremely disruptive. Of the approximately 3 million employees engaged in the industry directly, 40% have faced job losses — and the figures are only increasing," Sherry Bhatia, the president of the Hotel and Restaurant Association of Western India (HRAWI), told DW.

Maharashtra has about 10,500 hotels and 210,000 restaurants. The hospitality industry, especially small and medium hotels and eateries, are already in deep financial stress.

The HRAWI has appealed to the government to compensate industry employees and their families for the loss of income. It also calls for waiving all statutory fees, taxes and utility bills for hoteliers and restaurateurs.

"If this does not happen and there is prolonged lockdown or a complete lockdown, we will be doomed. We will otherwise have to shut down if there is no relief," Bhatia said.

Retailers, small traders fear for survival

The Retailers Association of India, an apex industry body, said the complete shutting of retail businesses other than essentials would impair the ability of retail and associated businesses to survive.

The body described the restrictions as a "retail lockdown," as only stores selling essential goods will be allowed to operate until the end of April.

"While the situation in the state looks grim, and implementation of stricter rules is necessary, it is also important to calibrate a balance between lives and livelihood," RAI said in a press release.

The Confederation of All India Traders (CAIT) said the restrictions had a grave impact on 2.5 million traders in Maharashtra.

"We really cannot begin to fathom what could happen. I know the [COVID] situation is serious, but so are livelihoods," CAIT secretary general Praveen Khandelwal told DW.

"The movement of people has been curtailed to a large extent, and, consequently, the overall consumer demand will also be impacted affecting us," Pradip Gupte, a trader from Thane, a Mumbai suburb, told DW.

What is the estimated economic damage?

Pradeep Shetty, joint secretary of the Federation of Hotels and Restaurants Association of India, told DW that the new restrictions would heavily affect India's food and beverage industry.

In Mumbai, the sector generates billions in annual revenue and employs 200,000 people, many of them informal traders.

"In Maharashtra, it is almost another lockdown for us; 90% of our revenue comes from being open at dinnertime. You cannot imagine what losses this move will have and how it will affect lives and livelihoods," Shetty said.

Many have appealed to the government to grant industry status to the informal food and drink sector and offer relief.

"The hospitality industry is one of the major contributors to the country's GDP, and its earnings were hugely impacted due to the pandemic," Dhanraj Poojari, the owner of the Shiv Sagar restaurant chain, told DW.

Last week, Care Ratings, a credit rating agency, estimated that the partial lockdown would chip off 400 billion rupees (€4.5 billion/$5.35 billion) from the trade, hotels and transport sectors. The impact on growth will be felt in the April to June quarter.

The Centre for Monitoring Indian Economy (CMIE), a leading business information think tank, said unemployment and labor stress from the yearlong pandemic was still taking its toll.

CMIE estimates that the labor market shrank by almost 3 million people in March compared with the previous month.

"Economic revival is not happening — and this is having an impact on jobs. If there is a complete lockdown, it will be a bad idea for Maharashtra, and we will be again seeing a migrant crisis," Mahesh Vyas, the managing director of CMIE, told DW, adding that even a partial lockdown would have an effect.

Murali Krishnan
Murali Krishnan Journalist based in New Delhi, focusing on Indian politics, society and business@mkrish11