Apex industry body Confederation of Indian Industry (CII) has sought infusion of over Rs 2 lakh crore into the economy in times of crisis emanating from the coronavirus outbreak in India. "A fiscal stimulus of around 1 per cent of GDP amounting to Rs 2 lakh crore is needed to put money in the hands of people through Aaadhar based Direct Benefit Transfer," the industry body said, in an action note on COVID-19 and its impact on industry and economy, to the Prime Minister's Office (PMO).
The body maintained that the government would have fiscal room with global oil prices going down. "With every $10 decline in the oil price leads to a saving of $15 billion in the oil import bill," the note stated. Suggesting a temporary one-time measure to boost consumer demand, the CII said via DBT, the Centre can transfer Rs 5,000 to people with income less than Rs 5 lakh per annum. "This can be for all persons greater than 18 years of age. For more vulnerable persons above 60, it can be raised to Rs 10,000," the body said.
It said with a budget of Rs 2 lakh crore, as many as 20 crore people could be compensated with a transfer of Rs 10,000 each or 40 crore people with a transfer of Rs 5,000 each. The industry body said data on workers in different categories showed that there were roughly 20 crore casual labourers employed in India right now and that they could certainly be compensated from the government's fiscal resources.
The CII also suggested distributing a month's ration to those below the poverty line and to daily wage earners using food stocks available with the Food Corporation of India. It sought tax-related relief of 10 per cent in long-term capital gains tax (LTCG) and keeping overall tax rate on dividends at 25 per cent.
Other relief measures suggested by the industry include clearing of government dues to the private sector; waive off of taxes for most affected sectors like civil aviation, hotels, SMEs, real estate and commercial infrastructure; making GST payable on collection of proceeds instead of raising of invoices; and the postponing of rules on the eligibility of NRIs and OCIs under the Income-Tax Act by one financial year.
The CII also asked the government to articulate that the spending on activities related to Covid-19 mitigation would be earmarked under Corporate Social Responsibility work of the corporate sector. "Allow companies to give advance CSR funds of next two years allocation in Prime Minister Relief Fund to support expenses for combating COVID," it said.
The body has suggested a series of monetary policy measures for the Reserve Bank of India to make sure there's enough liquidity in the system. It sought at least 50 basis point cut each in both repo rate and cash reserve ratio and change in the definition of NPA (non-performing assets) recognition from 90 days to 180 days till September 30.
The coronavirus outbreak has disrupted the global economy, and countries, trade blocs are taking fiscal measures to overcome the crisis. Travel, tourism and hotel industries are some of the worst-affected sectors in India due to travel bans, social distancing and suspension of business activities. To offset the economic impact of the deadly virus outbreak, the special COVID-19 economic task force announced by Prime Minister Narendra Modi on Thursday is expected to announce an economic package for the most-affected sectors.
While India is yet to come up with a rescue package in wake of coronavirus crisis, major economies of the world have announced billions of dollars worth bailout packages to offset losses due to the COVID-19's outbreak. The US alone has set aside over $1 trillion in a bid to protect the economy from COVID-19. UK, Switzerland, China, Sweden, Austria, and Japan, have also taken fiscal measures, including offering support to local businesses.