Economy

India's fiscal response to Covid-19 inadequate compared to other countries, says industry body

Our Bureau Mumbai | Updated on April 06, 2020 Published on April 06, 2020

Representative image   -  REUTERS

Take a look at some of the noted financial packages by countries on par with the Indian economy

In comparison to other countries, the fiscal package announced by India are only a few crumbs, according to The All India Association of Industries.

"Till date, the Indian government has not announced any stimulus packages for companies or businesses. Many economists are of the view that the government is concerned with increased fiscal deficit and productive output. However, it should be noted that fiscal discipline works hand in hand with the economic upturn," the association said in a statement.

"If there is no conducive business environment which was already down due to massive impact of the Global Slowdown, the laxity in announcing measures to revive this business environment will pay no support to the already expressed fiscal challenge. Boosting domestic consumerism will happen only by price competitiveness which is an all-time low in the country," said Vijay Kalantri, President, All India Association of Industries

Some of the noted financial packages by countries on par with the Indian economy are:

Uzbekistan

Uzbekistan also took proactive steps to minimize Covid-19 impact to the economy by creating $1bln special fund ,$3bln loans to the private sector, $500 mln loan deferrals, as well as tax holidays, and rate decreases social payments healthcare worker bonuses and other financial support equaling close to10% of GDP

Indonesia

The Indonesian government initially announced 10.3 trillion rupiah ($727 million) rescue package to support consumer spending and tourism in the country. The announcement was then followed up by a second stimulus package of 120 trillion rupiah ($ 8.1 billion) to further support its economy amid the Covid-19 outbreak. An amount of 22.9 trillion rupiah has been allocated from the package to aid loan disbursement towards businesses affected by the pandemic. In addition to this, the government has given 30 per cent corporate tax discount for the next six months. Apart from that, workers in the manufacturing sector with income below 200 million rupiah would be exempted from paying income taxes for the upcoming six months. Finally, the Indonesian government will also allocate some funds from the rescue package on social welfare and rural development as well as on measures to boost household expenditure.

Thailand

The Thai cabinet has approved $17.6 billion to help alleviate the impact of coronavirus epidemic. The package includes 150 billion baht of soft loans at 2 per cent interest rates. The government has also announced that it will set up a 20 billion baht fund to help firms or workers affected by the coronavirus outbreak. The government has urged central bank to protect debtors and has decided to offer relaxed debt repayments and lower interest rates for businesses suffering due to the coronavirus outbreak. Moreover, the government has decided to exempt import duties on materials used for making face masks.

Malaysia

The Malaysian cabinet has approved 20 billion Malaysian ringgit ($6.6 billion) financial stimulus to tackle the impact of coronavirus. It was also announced that travel agencies, hotels, airlines, shopping malls would get a 15 per cent discount on monthly electricity bills for six months beginning from April. Hotels will be exempted from service taxes till August. Public transport drivers and tourist guides affected by coronavirus will be given 600 Malaysian ringgit each. Doctors, medical staff, who are involved in containment of coronavirus in Malaysia, will be given a special monthly critical allowance of 400 Malaysian ringgit from February until the end of the outbreak. Immigration and frontline workers will receive an allowance of 200 Malaysian ringgit for their services.

Turkey

Turkey has announced $15.5 billion stimulus package, to protect small businesses, workers, exporters and pensioners from the impact of coronavirus.Under this rescue package, Turkish government will provide three-month deferral of loan payment by firms. It will also provide financial support to the companies affected due to the virus outbreak.Social security premiums will be postponed by six months for retail, steel industries, shopping malls; entertainment and hospitality sectors, food and beverage businesses, textiles as well as event organisation sectors.Furthermore, Turkish government will increase the lowest pension payment to $231 (1500 Turkish Lira). An additional fund of $308 million (2 billion Turkish Lira) is allocated for the households in need.

Italy

Italy, which recorded over 2,500 hundred deaths due to the coronavirus pandemic, has announced a rescue package of up to 25 billion euros ($28 billion) on March 16. The 25-billion-euro package includes- 10 billion euros allocated to support employment, 3.5 billion euros to strengthen healthcare system and individual cash bonuses to the Italians still working during country-wide lockdown. The package also include loan guarantees to small and medium businesses hit by the crisis. The Italian government has also laid out measures to provide citizens financial relief. Italian families can now apply for permission to suspend their mortgage payments if business shutdowns due to coronavirus threaten their livelihoods. Additionally, a monthly subsidy of 600 euros have been announced for 5 million workers, including those self -employed or seasonal workers. And, parents have been entitled to claim up to 600 euros from the government in order to pay babysitters amid the Covid-19 pandemic.

Bangladesh

Bangladesh announced stimulus packages to the tune of Taka 72,750 crore (USD 8,573 million) to counter the adverse effects of coronavirus on the country’s economy.“Earlier aTaka 5,000 crore (emergency) incentive package was declared for paying salaries and allowances of export-oriented industry workers and employees. Further fresh financial stimulus packages of Tk 67,750 crore were infused in the system .The total amount of financial assistance would stand at Tk 72,750 crore, which is nearly 2.52 per cent of GDP.Bangladesh government is going to pay salaries of all workers and staff for April may and June from this stimulus package which will be going directly go into worker’s bank account.Total Amt disbursed will be debited to the employer in the form of a loan interest at 2% payable over 2 years with a 6 months moratorium!!

Kazakhstan

Kazakhstan has reported no coronavirus cases on its soil but moved pre-emptively this week to suspend all public events and close entertainment venues in addition to announcing a stimulus package. An allocation 300 billion tenge ($740 million) towards measures to boost employment through infrastructure maintenance projects,has een announced. Also, the cabinet has been instructed to provide fiscal support to companies, enabling them to offer paid leave to employees forced to stay home with children as the oil-exporting Central Asian nation shuts down schools for three weeks.Inspite of neighbouring China, an important market for Kazakh exports, has slashed gas purchases from the former Soviet republic by up to a quarter, and a plunge in global oil prices has sent Kazakhstan’s tenge currency to all-time lows.

China

The Peoples Bank of China (PBoC) has implemented several policies to provide economic relief during the coronavirus outbreak. On February 3, the bank expanded reverse repo operations by $174 billion. It added another $71 billion on February 4. On March 5, the Chinese authorities allocated 110.48 billion Yuan ($15.93 billion) for coronavirus-related funding. On March 13, China's central bank lauched $79 billion stimulus effort to help the country's ailing economy. The People's Bank of China cut reserve requirements for banks that will free up to $78.8 billion in funds that will aid the firms affected by the Covid-19 outbreak.

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Published on April 06, 2020
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