Implement: Rs.102 lakh crore NIP now
The PHD Chamber President Dr D K Aggarwal has suggested a seven-prong strategy to mitigate the impact of coronavirus on India’s trade and industry.
Firstly, as there is a drastic fall in the business activities, vis–a-vis lower domestic and internal sales, the working capital requirement of the businesses has to be addressed by increasing the working capital limits of business enterprises by 25%. No new application should be required to be filed for this purpose.
Secondly, reduce the cost of capital by at least 100 basis points by instructing banks to pass on the benefit of earlier cuts and also cutting the Repo Rate from the current levels of 5.15%. Also create enough liquidity for the businesses and lower interest rates to help maintain and rejuvenate domestic demand.
Reduced cost of capital will enhance the competitiveness of exporters in international market and help exporters to grab the opportunity of slowing China’s global exports and increase Indian market share.
Thirdly, crude price has come down substantially but in India, the petrol and diesel prices have not come down due to higher fixed excise duty and central and state VAT. To boost and hand hold the Indian industry in these difficult times, he called for reduce Excise duties and VAT on petroleum, diesel and allied products by at least 25%, to bring down the prices of petrol and diesel by Rs.9-10 per litre. This will be a big relief to the industry, will boost and kick start growth, while reviving the spirit in the economy.
Fourth, as MSMEs are not that much strong in their financial requirements at this juncture a special category fund for the MSMEs to fund their finance needs will be crucial to save them from the coronavirus shock.
Fifth, government needs to enhance the consumption expenditure in the economy as increased domestic demand will help manufacturing sector to grow and maintain the capacity utilization.
Sixth, the allocation of Rs.102 lakh crore made for the National Infrastructure Pipeline for next five years needs to be implemented for the coming Financial Year, as increased spending in infrastructure will give a multiplier effect. This will rejuvenate the aggregate demand in the economy and mitigate the impact of corona virus on the growth trajectory of the country.
Seventh, the outbreak of coronavirus has adversely affected the supply chains in China. The manufacturing operations in the country have been disrupted as significant number of companies have temporarily shut their assembly and manufacturing plants.
To benefit from China’s decreased manufacturing production due to the coronavirus outbreak, the government needs to build up a well-integrated and competitive supply chain logistics including increase the number of cargo containers to meet the growing global demand of Indian spices, ceramics, home-ware, fashion and lifestyle goods, textiles, engineering goods and furniture, among others. fiinews.com
