PUNE: Considering the economic issues rising due to COVID-19 pandemic, members of Confederation of Indian Industry (CII) have stated the need for immediate substantive stimulus from the government in the form of support to the poor and support to the industry especially the MSMEs.
Speaking about the need, Vikram Kirloskar, President, CII, said that with economic activities being restricted for over 50 days now, the negative impact on the economy is expected to be even more significant than earlier anticipated. “This needs to be offset by a large fiscal stimulus so that jobs and livelihoods are protected. CII recommends the government to announce an immediate stimulus package of at Rs 15 lakh crore, which translates into 7.5 per cent of GDP, “ he added.
The broad elements of the stimulus include cash transfers amounting to Rs 2 lakh crore to Jan Dhan-Aadhaar-Mobile account holders, in addition to the Rs 1.7 lakh stimulus already announced.
“A key fall out of this economic slowdown will be the human cost in terms of loss of jobs and livelihoods, which need urgent government intervention. It should be ensured that the migrant labourers are kept within the purview of the proposed cash transfers,” said Chandrajit Banerjee, Director General, CII.
Further, to provide enterprises with the immediate support to pay salaries to its workers and prevent job losses, CII has suggested a provision of Rs 2 lakh crore for additional working capital limits to be provided by banks, equivalent to April-June wage bill of the borrowers, backed by a Government guarantee, at 4-5% interest.
A statement from CII stated, “To support the estimated 63 million MSMEs which have been battered by the pandemic, CII has suggested a credit protection scheme for MSMEs whereby 60-70% of the loan should be guaranteed by the government.''
The demand for a large stimulus package has some more worthy backers. India should come out with a large enough stimulus package to revive demand, Nobel laureate Abhijit Banerjee had recently said, asserting that putting cash in the hands of people would be the best way to boost the economy post lockdown.
Banerjee, while talking to Congress leader Rahul Gandhi through video-conferencing, suggested giving money into the hands of the bottom 60 per cent population to help revive demand. He was deliberating on the economic impact of the COVID-19 pandemic with Gandhi as part of a series of dialogues broadcast on Congress' social media handles.
Banerjee said it was important for India to announce a large enough stimulus package to deal with the crisis on the lines of what the US, Japan and Europe are doing.
"We really haven't decided on a large enough stimulus package. We are still talking about 1% of GDP. The United States has gone for 10% of GDP," the noted economist said. PTI inputs