India Inc. is in favor of the government announcing a back-up plan to protect the livelihoods of workers, small businesses and certain sectors affected by the second wave of the coronavirus pandemic, while a stimulus package may wait until the country is fully unlocked.
Although the Center did not announce a national lockdown during the second wave of the pandemic, leaving interstate movement of goods and people largely unchanged, state-localized lockdowns have closed non-essential businesses. , and the resulting demand squeeze puts small businesses in difficulty. retain their employees. In April, India saw its unemployment rate climb to 8%, with 3.4 million workers losing their jobs.
Finance Minister Nirmala Sitharaman told reporters after Friday’s GST Council meeting that the government has yet to make a final appeal to provide assistance to industry affected by covid. “The budget was not announced until February 1. We are in May. We have the whole year to go. The second wave has arrived. It’s not a full lockdown, but states have had lockdowns. So we receive inputs. We have to take a call. We have to understand where the impact is, how much it is, etc. The consultation process is therefore underway. We have not made a final call on this subject, ”she added.
Naushad Forbes, co-chair of Forbes Marshall and former chairman of the Confederation of Indian Industry, said a stimulus package to revive business activities can wait, what is needed immediately are measures to protect employees who have lost their jobs or small businesses such as restaurants and shops that have had to close due to closures induced by the pandemic. “In addition, sectors such as retail, clothing, hospitality and hospitality need support. If people are reluctant to spend because of scars and health issues, then the government can consider a stimulus package. What’s the point of getting people to go out and spend when they can’t go out, ”he added.
Assocham Secretary General Deepak Sood said that unlike the first wave where the focus was on reforms, the government’s tax measures this time around should include direct transfers to the unemployed. “MSMEs should benefit from a longer abstention. In addition, the Reserve Bank of India (RBI) may work again with banks on loan restructuring, especially in severely affected sectors. The Emergency Credit Line Guarantee Scheme (ECLGS) is expected to continue with higher spending. Since this is the start of the fiscal year, the focus on public spending and fiscal expansion would be offset by the recovery of the economy in the second half of fiscal year 22 ”, a- he added.
The second wave of covid can have devastating long-term effects, and the failure to restore confidence and mitigate household losses will hurt growth, increase poverty and widen inequality gaps, the Federation of United Nations warned. Indian Chambers of Commerce and Industry (Ficci) in a statement. . “While last year several measures were taken to support supply, this year a much greater effort is needed to support income and consumer demand. A comprehensive and targeted political response is the need of the hour. Immediate relief measures are essential to mitigate the economic shocks of two waves of covid. Fiscal intervention is urgently needed to support the recovery. The government should review the heads of the budget and revise them taking into account current priorities, “he added.
Ficci said the tourism, hospitality, aviation and retail sectors are in dire need of undiluted support, as in many other countries. “A financial package including direct support from the wage bill, credit support and an extension of debt restructuring should be considered. Sectors should benefit from regulatory and compliance relief by relaxing regulations, reducing the burden of multiple levies, rental and license obligations and taxes. The RBI could also consider a special regulatory exemption as part of the restructuring plan for these sectors with more liberal ratios, “he added.
The MSME sector has been severely affected due to labor shortages, soaring commodity prices and declining demand, said Sanjay Aggarwal, president of the Chamber of Commerce and Industry. industry PHD. “The government must take proactive and calibrated measures to mitigate the daunting impact of covid on people, industry, commerce and the economy, as it did in 2020. ECLGS is expected to be extended to ₹6 trillion to save industries with low interest rates, and the repayment schedule of these loans should be favorable and favorable to MSMEs. Effective policy measures are needed to support the creation of demand and maintain employment in factories, ”he added.
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