NEW DELHI: Industry chambers have offered a raft of recommendations to the government that draw from the global rescue initiative, seeking to cushion the economic fallout of the measures such as travel bans, closed borders and shut down of non-essential businesses taken to stem the spread of the pandemic coronavirus.
Indian Chamber of Commerce (ICC), ASSOCHAM, Federation of Indian Chambers of Commerce & Industry (FICCI) and Confederation of Indian Industry (CII) have sought fiscal stimulus and policy actions to allay the impact of the virus-led economic disruptions.
"The need of the hour is a stimulus which can increase the spending power of consumers. Till the global markets stabilise in next 3-6 months, we have recommended that the central bank may allow 1 year moratorium to corporates to allow them enough time to manage cash flow, relax NPA norms for six months and enhance working capital limits upto 20 per cent of existing limit to ensure funding of inventory piled up," said ICC President Mayank Jalan.
In a letter to PM Narendra Modi, CII Director-General Chandrajit Banerjee stated sectors like real estate, aviation, tourism, and aggregators are witnessing maximum stress and pressed for a fiscal stimulus of Rs 2 lakh crore besides a slew of tax cuts and reduction in interest rates.
The letter added that GST payments should be on collection of bills rather than on raising of invoices to avoid liquidity getting locked in case there are delays in payments. It also recommended a reduction of 50 basis points in Cash Reserve Ratio (CRR) and in repo rate to ensure that banks have liquidity to lend to industry.
FICCI said the coronavirus outbreak could have a deeper impact now as the global economy is already going through a slow phase currently, including China.
To cope with the crisis, the industry body recommended: Maintaining liquidity at surplus levels and provide special liquidity support for any companies / non-banks / banks that come under strain due to intensifying risk aversion in financial markets or due to large demand shock, suitable cut in policy rates (say, by ~ 100 basis points) so that consumption and investment do not come to a standstill.
Apart from these measures, the government should consider waiving of utility payments such as electricity and water to reduce fiscal pressures, noted ASSOCHAM.