Amidst the growing threat of Coronavirus, Confederation of Indian Industry (CII) president Vikram Kirloskar has written to Prime Minister Narendra Modi, requesting that a fiscal stimulus of ₹2 lakh crore be given in the hands of the needy citizens through Aadhar based Direct Benefit Transfer (DBT)
Mr. Krloskar also suggested that RBI consider relaxing the NPA recognition norms from 90 days to 180 days till September 30, 2020 to provide relief to industry faced with payment issues as well as pressure on banks to classify loans as NPAs.
“The Government may consider a strong fiscal stimulus to the extent of 1% of GSP amounting to ₹2 lakh crore to be given in the hand of the needy citizens through Aadhar based Direct Benefit Transfer. An amount of ₹5,000 for each individual, especially the rural and urban poor and ₹10,000 for the most vulnerable section – the elderly. The PLFS data shows that there are about 20 crore casual labourers who could be the identified beneficiaries. This will help maintain the consumer demand,” wrote Mr. Kirloskar.
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“Similarly, Special Mention Accounts (SMA) guidelines may be relaxed till September 30, 2020 in the form of SMA-1 category from 60 to 90 days and SMA-2 category from 90 to 180 days, beyond which the loan account may be considered NPA. These immediate measures will help industry and economy manage the economic impact and also help the banking sector tide over the stress of NPAs due to delayed debt servicing arising out of disruptions in business operations especially of SMEs,” said the letter.
To ease the cost of capital, which is currently under wide volatility, the industry body suggested that the government consider removing Long Term Capital Gains tax of 10% and fixing the total Dividend Distribution Tax at 25%.
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It requested that the GST payments should be on collection of bills than on raising of invoices to avoid liquidity getting locked, in case there are delays in payments. It wanted the government to clear the pending payments to industry on a priority basis.
On the monetary measures to be taken, the CII recommended that a reduction of 50 basis points both on Cash Reserve Ratio (CRR) as well as a Repo rate cut of 50 basis points be announced to ensure that banks have liquidity to lend to industry.
