The Associated Chambers of Commerce and Industry of India (Assocham) has recommended a stimulus package of at least $200-$300 billion and a 16-point agenda to sustain India's economy and thwart the global recession arising from the novel coronavirus outbreak. The economy would need transfusion of over $200 billion, with the possibility of ramping it up to $300 billion, over the next 12-18 months, according to Deepak Sood, secretary general at Assocham, an umbrella organisation representing over 250 chambers of commerce and trade associations, and 4.5 lakh member companies indirectly.
Of the corpus, $50-100 billion needs to be infused in the system over the next three months to help businesses and workers. The objective should be threefold, viz. immediate assistance to employees and labour through direct transfers and through employers, ensuring that companies have cash flow to survive the downturn, and finally stimulating demand and investment to revive the economy through fiscal and tax measures.
Assocham has also advised the government to modify the Fiscal Responsibility and Budget Management (FRBM) Act and consider the debt/GDP ratio as a metric, in place of fiscal deficit. "The government needs to set an example for other businesses with no bills being unpaid for more than 15 days. This will enormously help the credit cycle and will also bring down tender prices for everything," the trade body said.
Assocham has also recommended an across-the-board reduction in GST by 50 per cent for 3 months and 25 per cent for the fiscal. "The final GST due should be payable in 6 quarterly installments starting October 2020 with no interest. Final income tax of FY 2019-2020 and advance tax FY 2020-2021 should be payable starting October 2020 in 6 quarterly installments with no interest," Mr Sood emphasized.
Among other major recommendations, the industry apex body has suggested a one-time loan restructuring to all corporates assuming a principal repayment start date moving upwards from March 2021, holding the National Company Law Tribunal provisions in abeyance for 6 months, a further 100 bps reduction in interest rate/repo-rate by Reserve Bank of India, creation of a public AMC funded by RBI seed capital to buy all distressed assets in the banking system and immediate processing of all dues of governmental entities and PSUs.
Besides, Assocham has asked for a 12-month interest waiver and 12-month moratorium on principal repayment owed by hospitality, aviation, tourism, transport, holiday operators, malls and cinemas, as these industries have taken a huge hit on account of the coronavirus lockdown.
"The interdependency of the salaried and working-class with that of the businesses is the key parameter and therefore, it is essential for the country to revive the entire business eco-system that keeps them employed and businesses unburdened, once the government masters the mechanism of containing the virus and the scare is reduced," Mr Sood added.