India Inc is hoping against hope for a big stimulus package to help business enterprises and SMEs battle the economic fallout and stay alive in view of the unprecedented crisis caused by Covid-19.

While admitting that protecting lives comes first, industry pointed out the need to protect businesses, especially smaller ones that are on verge of closure.

“Industry wanted a stimulus earlier as the economy was slowing down in the past. This has been compounded by Covid-19. So something has to be done to revive the economy. I am sure they will do what is necessary to revive the economy,” said RC Bhargava, Chairman, Maruti Suzuki India Ltd.

Most of the industries are clueless about the recommencement of business, cash flow and salary payments to staff in the coming months if the lockdown persists.

Mallika Srinivasan, Chairman & Managing Director of India’s leading tractor company, Tractors and Farm Equipment Ltd, stated that the world economy was facing a situation akin to the Great Depression, and this time India is not insulated.

Policy measures

“The necessary lockdown has rightly positioned humanity above all else and India took the right steps early. As anticipated, the fallout has been on the economy. The package of measures so far announced has addressed the most affected sections of society. But these can only be temporary measures. Putting the economy back on the rails alone can address issues of growth and unemployment. We keenly await an economic stimulus package that will strongly boost demand in the economy and support our exporters,” she said.

Srinivasan also highlighted that equally critical will be the policy measures which ensure strong procurement across the country for agricultural commodities by government, backed by good MSPs, and urgent measures to enhance and make available temporary storage and easy financing for agri inputs and machinery usage by public sector banks.

For a strong impact, the package needs to be bold and in the range of a minimum 5 per cent of the GDP, she said.

Cash infusion

Industry associations such as Assocham and others have already made a plea for a big stimulus from the government.

“Industry needs an urgent infusion of nearly $200 billion which can pump into the market in a staggered manner to retrieve the business cycle without incurring a further economic loss,” said Niranjan Hiranandani, National President, NAREDCO and Assocham.

Industry captains pointed out that the main emphasis should be on protecting employments.

“The loss of time and cash will damage the industry as the Indian industry is not cash-rich and cannot sustain operations if adequate financial support is not extended by the government,” said M Manickam, Chairman of Coimbatore-based Sakthi Sugars.

Various countries such as the US and the UK have announced massive economic stimulus packages to put the industries back in motion without losing focus on coronavirus containment. India, too, could work out such a stimulus in order to sustain the economy and help people retain jobs.

“It will help substantially if the government initiates steps on a war footing to avert a severe economic crisis, which will be worse than the pandemic,” said Vanitha Mohan, Chairperson of Coimbatore-headquartered Pricol Ltd.

Small businesses

As the problems are likely to continue for 2-3 quarters for MSMEs, most of them seek the government’s sustained support in the form of working capital during this period as it would help them rebuild, retain the workforce and come out of the crisis sooner.

“Most of the companies, particularly SMEs, have paid salaries for the month of March in full. But all are worried for the next month. With production halted and no revenues, it will be a big hit for small businesses,” according to X Arokianathan, Co-Convenor, MSME Panel, Confederation of Indian Industry-Tamil Nadu.

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