The Union Cabinet is meeting on Wednesday where a discussion is likely to take place on stimulus package for India Inc. The Cabinet Committee on Economic Affairs (CCEA) is expected to take a call on the package soon.
A recent survey on the impact of Covid-19 lockdown had said that it could wreak permanent damage on businesses and force many to lay off people, unless the government announced a substantive economic package immediately. The survey was conducted jointly by the Federation of Indian Chambers of Commerce and Industry (Ficci) and consultancy firm Dhruva Advisors.
Ficci has been demanding a stimulus package of Rs 9-10 lakh crore to bring the economy back on track. Some industry associations have demanded a Rs 16 lakh crore industry revival package. Niti Aayog, the government’s think-tank has said that a package amounting to five per cent of GDP is in order. That’s around Rs 9.5 lakh crore.
According to the survey, 69% of respondents expect the government to announce a package, with tax relief, fiscal incentives, and efforts to ease compliance and create demand. Officials in the finance ministry said on condition of anonymity that various options have been ready with the government and it will come up with right stimulus package at an appropriate time.
The impact of the pandemic and the lockdown has taken a toll on the economy. While the International Monetary Fund (IPF) expects India to grow by 1.9 per cent in 2020, most others aren’t as optimistic. Barclays has said the economy will grow by zero per cent and Nomura expects it to contract minus 0.5 per cent.
The Reserve Bank of India (RBI) has so far announced two sets of measures, reducing the policy rate to 4.4 per cent, pushing banks to lend more, providing Rs 4.74 lakh crore of liquidity, and easing bad loan norms to ensure the books of banks aren’t awash in red.
According to the survey, companies want export incentives, release of pending payments, tax refunds, additional working capital from banks without collateral, and further cuts in the policy rate.
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