Chandigarh: Confederation of Indian Industry (CII) based on its assessment of the economy and the on-ground situation submitted its recommendations on an organised re-start post the lock down, to the Government today.
Extend cash transfers through JAM accounts, support industry through banks
CII is fully aligned with the Government’ s view that the shutdown should be lifted as early as feasible, in a safe and calibrated manner. It is important to safeguard the macro fundamentals to ensure that the country does not suffer significant rating downgrades, and potential flight of capital. CII therefore recommends a fiscal support package, for FY21, limited to 2 per cent of the GDP, in addition to the Pradhan Mantri Garib Kalyan Yojana.
Limit the economic package to an additional 2 per cent of the GDP
Detailing the suggestions Mr Chandrajit Banerjee, Director General CII, said, “The Government should extend additional support to the people at the bottom of the pyramid thorough cash transfers. Support to industry could come through the banking system.” Explaining the rationale, he added “Our estimates are that the economy would need a credit expansion of 14-15 per cent. Additionally, support through banks would allow the government a leverage of 5-6 times, mitigating the fiscal impact”. The support should include working capital enhancement and support for payment of wages to all industry and special re-construction terms loans for MSMEs and the stressed sectors.
Address issues related to health, safety, logistics, migrant workers and coordination between centre and states
CII recommendations also include measures on issues related to health, safety, logistics, migrant workers and coordination between centre and states.
Key Highlights of the CII Suggestions on ‘Towards an Organised, Safe & Sustainable Re-start of the Economy’
- Economic Package
- Additional support to the lowest strata and the informal sector through cash transfers, amounting to INR 2 lakh crore to JAM account holders.
- Support to Enterprises through banks
- enhanced credit limits for working capital across the board to all industries.
- Additional working capital equivalent to April – June wage bill of the borrowers, backed by a Government guarantee, at 4-5 per cent, with a refinance guarantee from RBI.
- Similar support to stressed sectors for meeting interest obligations.
- Additional reconstruction term loans to MSMEs and stressed sectors with a government guarantee on default, up to 20 per cent.
- Pre-empting Bank Failures: The stress in the real sector has the possibility of spreading to the financial sector. Government of India should set apart a fund of INR 30,000 crs that could be used by banks that meet certain criteria and under specified conditions to access this fund by way of issuing Tier I bonds, which will be convertible into equity at the option of the fund.
- Measures on health, logistics, migrant workers and coordination
- Phase the re-start using a dash-board approach. Government should create a dashboard to monitor curves of various key cities and states. The re-start calendar for cities and states and the progressive ramp up in terms of proportion of manpower allowed to get back to work, should be based on these dashboards.
- All facilities that re-open should ensure social distancing, screening, sanitization, etc. The fulfilment of the norms should be on a self-certification basis with penalties for violating units.
- The government should ensure adequate availability of masks, testing and protective gear.
- The Government should facilitate the seamless movement of goods and services across the country. Key interventions include:
- Ensuring no harassment by authorities at the borders and various check posts, by way of clear and uniform instructions to police personnel on the ground, across all states.
- Drivers and other workers engaged in the sector should be issued e-passes by local authorities, those with e-passes should be allowed to travel to their place of workforce.
- Special transport could be arranged from clusters from where large number of workers come, to clusters where they come to work, with all the safety protocols in place.
- Dhabas on highways should be allowed to open, so that the required basic amenities are available to the truck drivers en route.
- To get the migrant workers back, the Government should:
- Undertake an aggressive ‘messaging’ campaign on the preparedness of the government and the industry for the re-start.
- Facilitate their return through issue of e-passes and by arranging special transport.
- A COVID insurance scheme for migrant workers, for three months. Part of the cost could be borne by the government and part by industry.
- Set up an empowered group of Ministers at the Centre to plan, review and address implementation challenges. Inter-departmental taskforces, led by the respective Chief Secretaries should be formed at the state level.
- Complete alignment between the notifications/ advisories issues by the centre and states; the state notifications/advisories to be templatised.