A worker cleans a shop after being allowed to reopen with restrictions in New Delhi on June 7, 2021, as India's capital began a gradual easing of restrictions after infections across the country fell to a two-month low. Now consumer costs are rising. Photo: AFP / Money Sharma

The second wave of Covid-19 in India is now taking a toll on retail sales as states impose curbs on the movement of people and business activities to control the spread of the virus.

According to a Retailers Association of India survey, retail sales in May were barely one-fifth of pre-Covid levels. The sales figure slid 79% from the same month in 2019.

Retailers across the country reported falls in sales with the steepest decline averaging 83% in the Western and Northern regions. The Eastern region reported a 75% fall, while the Southern region was comparatively less affected (73%) during the period. On a sequential basis, the decline in May was much steeper than the previous month, when overall sales across India were down 49% compared to April 2019, the survey added.

As localized lockdowns had led to the closure of shops in many cities and many industries had adopted remote working, customers had cut down on discretionary and impulsive purchases. In terms of retail categories, beauty, wellness and personal care saw the steepest decline (87%), followed by footwear (86%) and sports goods (80%) last month as against May 2019. However, food and grocery witnessed a comparatively lesser decline of 34% compared with May 2019, while the quick service restaurants witnessed a dip of 70%.

The association claimed that retail businesses continue to face financial pressures on various fronts such as salaries, rentals, electricity charges and various taxes and license fees, among others, due to the pandemic-induced restrictions. However, the group is optimistic about June as many states are now easing the lockdown norms in a calibrated manner.

Delhi, Haryana, Tamil Nadu, Karnataka, Maharashtra and some other states have now eased local restrictions following a drop in cases. The country’s daily number of new infections is now less than 100,000, down from the peak of 400,000 cases in mid-May. But health experts feel the governments should exercise caution while reopening cities, or the cases may spike again.

The retailers’ association CEO, Kumar Rajagopalan, favors vaccinating a major chunk of the population. “If the vaccination drive picks up, things can recover really fast just like how it is happening in the US or the UK, but if it continues the way it is, recovery is expected to be delayed,” he told Financial Express Online.

The association had in April urged the government to extend the benefits of the emergency credit line guarantee scheme to retailers and sought a moratorium on the principal and interest on loans for up to six months. It had claimed that 80% of retail stores are closed due to localized lockdowns and predicted that, if the working capital challenges of the retailers are not addressed, it may lead to around 750 billion rupees (US$ 10.22 billion) of bad loans.

Rajagopalan said, “If the Finance Ministry extends the support, at least there is a possibility to come out of this. So, we will have to wait and watch. Last year food businesses were at about 90% level, but this year it also got impacted as many retailers were asked to shut down.”