With the recent hike in the number of cases of persons falling prey to the novel coronavirus, SARS-CoV-2, the country has hardly ever encountered such a scale of an unprecedented situation before.
The economic implications are far worse than what meets the eye, with high-risk services sector (aviation, malls, multiplex, hotels & restaurant chains, IT etc.) taking a major hit along with its workforce.
There is an urgent need by the Govt. of India to halt this “Economic Pandemic” which could be done in different ways-
The Govt. has to maintain liquidity at surplus level and provide special liquidity support to the companies/ NBFCs. For this it has to inject a massive Fiscal stimulus package into the economy.
A temporary income support should be provided to the persons involved in the Informal Sector (80% of whom are daily wage earners) via a Universal Basic Income Scheme. This can be done through Direct Cash Transfers to the targeted Jan Dhan or MNREGA account holders.
There ought to at least 50 basis points to 2% rate cut from RBI and the Govt. can also announce 0% interest loans to the SMEs for their sustenance.
There is a need for Forbearance whereby Debt payments should be deferred from March 31st to a couple of months later until then the banks should supply the working capital, also the NPA criterion for MSMEs should be pushed back from 3 mon to 6 mon.
The Govt should also turn to the Private Sector which sits idle and has the logistical bandwidth to help out in this time of crisis be it through supplying medical equipment or ventilators or providing isolation space for the patients.
As the country is locked down for the coming three weeks, India Inc has to stretch themselves to sustain the situation and face the challenge. The Indian government has also urged employers to not cut jobs and salaries. Many CEOs and management teams are taking pay cuts to ensure their workforce does not have to bear the brunt.
Sources – the Quint, economic times, the Print.