To rebound, India Inc will need more stimulus

Deepak Sood | Updated on June 28, 2021

As the impact of Covid 2.0 has been severe, businesses would need monetary and fiscal support, as well as regulatory forbearance

Indian industry has emerged as a crucial partner with the government, civil society and common citizens in the battle against Covid-19, especially since the last week of April.

Whether it be diversion of oxygen supply from the industry to hospitals, joining the logistics and supply chain for essential medicines or reaching out to the global partners for shipments of urgent supplies, India Inc has been making its vital contribution in these pandemic times.

When it comes to the entire healthcare value chain, apart from the front end supply of essential medicines and medical devices, there are a lot of other crucial building blocks which have to be fixed for the last mile delivery of treatment.

The entire pharmaceutical value chain — including raw material for PPE kits, masks, syringes and packing material for medicine — ably aided by transportation and warehousing logistics, chipped in to reach essential medical supplies to the patients through our brave and diligent doctors, nurses and other health workers.

Thanks to State-wise lockdowns and our healthcare system, the case load of coronavirus has been on a continuous decline and the positivity rate is dropping.

This brings us to an important issue of how prepared we are in terms of returning to near normalcy. For sure, we cannot afford to throw open everything in one go; the unlock would have to be gradual.

Behaviour protocols at the workplace, factory premises, public transport and markets have to be strictly enforced. Trade and industry would have a major role in ensuring that each and every employee follows Covid-19 appropriate behaviour, especially in terms of social distancing, wearing masks and maintaining hygiene.

Now that the caseload of the second wave is abating, industry and trade would want to resume or reinvigorate their business. India Inc has to engage rigorously with the government and the RBI for stimulus packages designed for different sets of units and trade.

As the government gets some respite from fire-fighting the pandemic, Corporate India would be making a strong case for extension of financial support, accompanied by packages which protect jobs and businesses.

There is a broad consensus in industry and among economists that the government and the RBI should expand their balance sheets further and start spending aggressively.

Industry and trade will have to press for regulatory forbearance from civic authorities and tax departments, and loan restructuring from the RBI and banks.

Hand-holding needed

Sectors like hospitality and mobility especially will need help from the government.

Also, large corporations must handhold their vendors, particularly in the SME segment, extending to them working capital support, a firm order book, timely release of payments, and innovation solutions under the new normal. The old contracts have to be enforced with much more flexibility, with the parties not seeking legal recourse like force majeure or law of impossibility.

The business relationships between the owners of commercial space and tenants have to be reworked in a pragmatic way. As far as possible, litigation should be avoided in these difficult times. Industry chambers would have a significant role in dissemination of ideas for co-opting with partners.

To be fair, a lot had started happening on these lines right from the first wave of the pandemic. And though the pain has been much more in the second wave, there are certain experiences which are being leveraged upon.

For instance, unlike the complete lockdown in the first wave, States have resorted to partial shutdowns, allowing large sections of the manufacturing sector to function.

Further, from the tumultuous past two months lessons in terms of resetting some of the work-related protocols, business re-engineering, product innovation and leveraging technology need to be learnt.

Also, the rural population needs to be safeguarded by reducing their pain points. It is rural resources which helped the Indian economy limit its losses in the first wave.

The writer is Secretary General, ASSOCHAM

Published on June 27, 2021

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