Industry lobby seeks up to $300 billion aid
CII HAS ALSO URGED THE GOVERNMENT TO CONSIDER A CAPITAL INFUSION OF UP TO ₹30,000 CRORE IN PUBLIC SECTOR BANKS TO PREVENT THE OCCURRENCE OF DEFAULTS IN BANKING
NEW DELHI: In order to put the Indian economy back on track in the aftermath of the covid-19 pandemic, i ndustry l obby groups on Wednesday urged the union government to announce a bailout package of $200-300 billion, along with a host of other incentives f o r s mal l a n d medium enterprises.
India’s economy is expected to decline significantly in the current financial year due to the negative impact of the pandemic on manufacturing and service industries.
Ratings agency Crisil, on April 3, had announced a downward revision of Indian’s gross domestic product (GDP) growth to 3.5% for 2020-21.
According to recommendations submitted by the Confederation of Indian Industry (CII) to the finance ministry, to stage a recovery in economic activity, the Centre should help corporate entities with additional working capital loans from banks backed by a sovereign guarantee, besides providing additional reconstruction term loans to medium and small enterprises, wherein it must offer a guarantee of up to 20% of the default.
CII has also urged the government to consider a capital infusion of up to ₹30,000 crore in public sector banks to prevent the occurrence of defaults in the banking system. It also advised t he government t o go f or a phase-wise revocation of the lockdown. It said manufacturing and construction activities should be allowed in a limited scale in the first phase.
“Migrant workers could be issued e-passes by local authorities like the BDO or the tehsildars, based on the industry requests. Special transport could be arranged from clusters from where large numbers of migrant workers come to work, with all the safety protocols in place.”
Assocham, on the other hand, recommended the government ‘to modify the FRBM Act to consider the debt-to-gdp ratio as a metric, instead of fiscal deficit, and reduction in gross domestic product by 50% for first quarter, and 25% for the entire fiscal year.
According to Deepak Sood, secretary general, Assocham, to keep up with most economies of the world the Centre must institute stimulus measures with 10% of GDP. The Indian economy will need a transfusion of over $200 billion with an ability to go up to $300 billion, over the next 12-18 months, he added.
“Out of that corpus, $50-100 billion cash needs to be infused in the system over the next three months, to arrest the loss of jobs and compensate f or l oss of income. Such an infusion would help businesses and workers tide over the challenging situation.”