Govt urged to help trade and Industry during COVID-19
The PHD Chamber of commerce and Industry in its short-term and long-term suggestions to the government has suggested a stimulus package of Rs.11 lakh crore from the Government to mitigate the impact of pandemic COVID-19 economy, trade and Industry.
“We appreciate Government’s proactive and fast track measures to safeguard its people, economy, trade and industry against the wild tide of pandemic COVID-19 and expect a significant fiscal stimulus of at least 5% of GDP which becomes at around Rs.11 lakh crore,” said Dr D K Aggarwal, President PHD Chamber in a press statement issued in New Delhi on 8 April 2020.
The Government has already provided a stimulus of Rs.2 lakh crore, therefore, the chamber expects the remaining Rs.9 lakh crore in terms of various relief measures and benefits to India’s trade and industry, said Dr D K Aggarwal.
A significant stimulus of 5% of GDP would help the economy to grow at around 5% in the current financial year 2020-21.
“We recommend in our suggestions to the Government to increase the consumption expenditure in the economy and compromise with the fiscal deficit even if it slips by 2 to 3 percentage points in the current financial year 2020-21,” said Dr Aggarwal.
Businesses are facing hardship as inventories are piled up and working capital has been blocked, at this juncture.
An automatic increase of 25% in working capital without any procedure and application will reduce the stress and the increased working capital should be allowed to convert into a term-loan with a provision of 3 years repayment period, Dr. Aggarwal explained.
Such reform measures would go a long way to help trade and industry to operate in this extremely difficult time.
In the other short-term suggestions to the Government, PHD Chamber has suggested an immediate reduction in the lending rate by all the banks to percolate the full effect of recent 75 basis points cut in repo rate by the RBI.
Also, the chamber suggests differing the EMIs of the term-loans for 6 months, special interest subvention @3% p.a. in loans to MSMEs and other badly affected industries, abolish all fixed charges of all the utilities and defer utilities bills by 3 months.
It has called for the release of outstanding payments of MSMEs, from the Government and PSUs, and refunds of GST, income tax and export incentives by the respective departments of the Government by 15 April 2020 to help them to meet their financial requirements in this extremely difficult time.
Also, the chamber requested the Government to pay 75% of salary of the workers of the lockdown period and employer contribution in PPFs during lock down period should be brought down to zero to ease the pressure financial burden of the industry.
“In our suggestions for the long-term measures, we suggest to reduce income tax of the proprietorship and LLPs firms to the level of 25% for old and 15% for new companies, reduce the customs duties on basic raw materials by at least 5 percentage points, reduce the cost of capital with a further reduction of 100 basis points cut in the Repo Rate to enhance the competitiveness of manufacturers and exporters in international market,” said Dr. Aggarwal
He suggested rationalisation of GST rate structure by merging the 18% tax slab with 12% tax slab, further recapitalization of the Public Sector Banks.
Increase in government consumption expenditure and capacity building by the business firms would be crucial at this juncture to rejuvenate the economy to its potential growth trajectory of 7-8% in the next few years, Dr Aggarwal pointed out. fiinews.com
