New Delhi: Announcement of an appropriate fiscal stimulus will be a morale booster for the industry that has been reeling under pressure due to a nationwide lockdown, says Jaspal Bindra, Chairman of Centrum group, adding that it will save many companies from going bankrupt.
Industry lobby groups such as FICCI, CII and Assocham also sought an early announcement of a fiscal stimulus package to help the businesses, particularly the MSME sector that have been facing unprecedented cash crunch as the economic activity came to a grinding halt since the last week of March.
However, despite speculation of its early announcement and intense lobbying for it, the Union government has deferred the announcement of a fiscal stimulus package for the industry for over 8 weeks as Prime Minister Narendra Modi approved the third phase of lockdown from May 4 to May 17, which has already been extended by some states till the May end.
It prompted some people to argue that the announcement of fiscal stimulus has been delayed as it will not be of much use when the industry is under lockdown.
“In terms of the timing of the announcement, I find it completely irrelevant whether industries are close or open. I am not very clear as to why people feel that there is no value in announcing the package,” said Jaspal Bindra, Chairman of Centrum Group, a financial services company.
The Union government was expected to announce a fiscal stimulus package soon after the announcement of the PM Garib Kalyan package worth over Rs 1.7 lakh crore in March this.
The PM Garib Kalyan is aimed at insulating nearly two-third of India’s population from the adverse impact of a nationwide lockdown by ensuring food, fuel and some disposable cash in their hands.
Jaspal Bindra made a case for an early announcement of an appropriate fiscal stimulus package for the industry amid a nationwide lockdown as such packages have had positive impact in other countries. However, contrary to industry expectations, the economic stimulus package has been delayed as a meeting of the Union cabinet has not been convened for the last two weeks.
Read more:COVID-19: India needs large fiscal stimulus, says Basu
“I think we have seen the announcement of generous packages by the US, Germany and New Zealand and others well before lifting the lockdown,” Mr Bindra said in response to a question by ETV Bharat, adding that it has created such a positive sentiment in those countries.
He was participating in a webinar organised by Mumbai based electronic payments company EPS India.
“Hertz, the car rental company, has now got saved because of the announcement of the package,” he said.
While the US Federal Reserve announced a $2.3 trillion lending programme to support the US economy to overcome the economic challenge posed by the outbreak of the Covid-19 virus, Germany announced over $800 billion package and UK government announced a package of £330 billion.
The lending programme announced by the US Fed exceeds the economic package announced by it in the wake of the economic crisis of 2008-09.
“The Boeing was going to go through with the claim for bankruptcy and it was stopped because of the package,” said Jaspal Bindra while underscoring the positive impact of a package on business sentiments.
“I think it will have the right impact if it is in the right measure,” he added.
The highly infectious novel coronavirus (SARS-CoV-2 virus) has so far killed over 2,100 people in the country and more than 2,80,000 people worldwide, wreaking havoc on societies and global economy that is expected to suffer a loss of $9 trillion.
(Article by Krishnanand Tripathi)
