MUMBAI: Chairman of the Aditya Birla Group, Kumar Mangalam Birla has said that the viral pandemic led lockdowns may lead to India’s GDP contracting in FY21, but exuded hope that the recession is likely to be “one of the shortest, assuming no second wave of the pandemic recurs.”

“… 2020 recession is turning out very different from the past recessions. It has been too sudden, almost off the cliff…India’s GDP is likely to contract in FY21, which would be the first such instance in over four decades. The contraction is estimated to be severe during Q1,” Birla said in a letter to Hindalco‘s shareholders on Friday.

Calling the situation a once-in-a-century crisis for the economy in 2020, he said the recession and the situation is likely to turnaround much faster.

“This recession is likely to be one of the shortest, assuming no second wave of the pandemic recurs,” he added.

A stringent national lockdown slowed the spread of the pandemic started in the last week of FY20 and remained active to varying degrees in different geographies through most of the Q1 of FY21.

“It is estimated that about 80% of India’s GDP originates from districts which were classified under the red and orange zones during the lockdown, where economic activity remained severely constrained,” Birla said.

Some scars of the crisis will remain in the form of subdued consumer and business confidence. Some sectors, like airlines and hospitality, will take time to recover fully, he said.

“Around $9-trillion stimulus from different governments globally will help to support this recovery, along with the monetary actions by Central banks. These policies will also help to restrict the second-order effects like defaults and bankruptcies,” Birla said.

Acknowledging the role played by the Reserve Bank of India (RBI) and Government of India in responding to the challenge, by announcing several policy measures to provide relief to the affected sections of the economy, to reduce the possibility of business failures and to support the process of recovery.

Some reforms and policies announced along with the ambitious National Infrastructure Pipeline program will support India’s medium-term growth rebound, Birla said.

During the pandemic, Aditya Birla Group has conducted several surveys to its employees to understand the trends and mindsets. “A pulse survey conducted with ABGites (ABG employees) showed an assuring trend – 86% were confident about delivering their Q1 goals of the new fiscal,” Birla said.

The pandemic has also accelerated our shift to digitization across businesses, he said, a new wave of digital energy is being unleashed with a clear focus on getting closer to our customers.

“Business models have changed, retail has made an emphatic foray into masks, our Chemicals Business is producing disinfectants, and the Fibre Business is manufacturing antibacterial fibre,” Birla said.

The Group’s near-term focus is to work on cash conservation, the safety of its teams and assets, and strengthening its business relationships, he added.

The Aditya Birla Group is also closely examining the evolving changes in the business environment and their implications, to position itself well for leveraging the opportunities through and after the economic revival

“FY20 is not just another fiscal. Never has the transition between two financial years been as tumultuous for the global economy. The pandemic is no doubt, a sobering reminder of how the world can change in unforeseeable ways,” he said.