Fiscal stimulus is set to make another trip to the Indian economy to avoid growth marching towards a full stop.
There's no sector that's unaffected by the lockdown as the coronavirus takes an uninvited tour.
The ongoing loss of business, in some cases exacerbated by an existing demand slump, has primed expectations that the government will bring in the big guns to rescue businesses.
The US, the UK and Japan, which are in debt up to the ears, have all literally emptied coffers to protect the private sector to avoid one potent fallout: unemployment.
If businesses are without revenue, it leads to households without income resulting in the vicious cycle drill, which economies must avoid at all costs.
India's joblessness is a gray area, though the word on the street is it's already high. So what should the proposed relief package look like?
Anubhuti Sahay, Head, South Asia Economic Research (India), Standard Chartered Bank, suggests everything from loan guarantees to MSMEs to temporary 1 per cent corporate tax reduction for one year, cash transfers to self-employed and casual labourers and infrastructure investment to jumpstart the construction sector.
India has nearly maxed out its debit card (falling revenue) and to an extent even its credit card (soaring fiscal deficit), so it won't be an easy call.
Forecasts peg the FY21 fiscal deficit to breach 9 per cent and hence economists suggest suspension of the Fiscal Responsibility and Budget Management Act (FRBMA) to borrow without the fear of rating downgrades.
It was done during the 2008 financial crisis, and the government should probably give it another whirl, she said. "But (India) should aim for a combined fiscal deficit target of 6 per cent by FY24," Sahay reasoned.
Almost every sector from airlines to retail to hoteliers has sought government handouts, big or small, and the message is one of urgency: Do it once, do it now. For, an ill-timed rescue will not only make revival expensive, but also futile.
While the speed and size of the stimulus plan is critical, India can perhaps draw its blueprint from other nations.
The first to announce it was Denmark, whose boldness will cost 13 per cent of its GDP. The UK too was quick on its feet announcing three packages in 10 days flat, with the last lot being a blank cheque, offering unlimited financial support to its people and the private sector.
The US' $2.2 trillion package -- its biggest fiscal stimulus in history -- was roughly 10 per cent of the GDP, comparable only to World War II when federal spending crossed 10 per cent of GDP. Japan too pledged an unprecedented $1 trillion stimulus aggregating 20 per cent of its GDP.
Let's see some highlights.
Federal governments paying salaries to private sector employees tops among the relief measures, hands down.
Denmark is footing 90 per cent of employees' salaries to ensure companies won't fire them, while Britain is paying up to 80 per cent. While the German government and employers will split the salary bill, retrenched French workers will get unemployment benefits equal to 84 per cent of their wages. Plus they get to keep their jobs.
Companies too have some welcome elements in the relief packages.
Japan is allowing cash-strapped small and mid-sized firms to borrow at zero interest and without collateral, while sector-specific sops include financial support to airlines worth 2 trillion yen along with a grace period for payment of landing fees.
The US designed a $360-billion fund for SMEs and a $500-billion bailout fund for big businesses to cover running costs including wages and rent for two months. As a bonus, Uncle Sam will also repay loans in full, if employers don't hand over pink slips to staff and rehire workers laid off last month.
Denmark went one step further giving 70 per cent state guarantees to new bank loans of companies and to encourage bank lending, while the UK's 30-billion-pound tax holiday suspended value-added taxes for one quarter.
Besides loan guarantees to all firms, the hospitality sector got a one-year holiday from paying business rates, while small firms are allowed generous cash grants.