RECOVERY FORMULA

➘ The Centre must loosen its purse strings, raise the fiscal deficit target from the current three per cent of GDP to four per cent

➘ Raise state governments’ debt-to-GDP targets from the current 20 per cent to 30 per cent to increase their ability to spend

➘ Provide income support to poor households and financial support to vulnerable businesses

➘ Address the working capital crunch. If larger companies have access to low-cost lending, they will be better placed to make payments to smaller suppliers

➘ Make demand-side interventions—direct cash transfers and tax cuts—to leave more money with consumers so that domestic consumption increases

➘ Allocate more funding to income transfers, to schemes like MNREGA, and speed up the transfer of revenues owed by the Centre to state governments

➘ Improve spending on public infrastructure.

Create specialised NBFCs, classified as infrastructure finance companies, to offer longer term loans to the sector

➘ Make medium- and long-term structural interventions, such as privatising power distribution companies, encouraging FDI in railways by clearing land-acquisition bottlenecks and easing procurement rules

➘ Reform the financial sector to reduce high interest rates—Indian manufacturers currently pay 12-14 per cent interest on borrowings, the highest among emerging market economies

➘ Focus on MSMEs and salaried employees. Introduce an urban variant of MNREGA, under which workers in small firms in the unorganised sector get Rs 200 a day from the government

➘ Assist those who have lost jobs, and those in danger of losing jobs. Canada, for instance, is offering to subsidise the wage bill of companies that have lost more than 30 per cent of their revenues

➘ Incentivise foreign investment in large industrial segments by simplifying the complex laws

➘ Build more financing options by creating alternatives to bank finance, including the corporate bond market