Lockdown 3.0: Industry bodies welcome relaxations, some confusion remains

Reiterate demand for a stimulus package

Most industry bodies and exporters expressed relief at the broad relaxations announced by the government on Friday, but reiterated their demand that the government bring out a stimulus package to help distressed segments of the economy.
 

The Ministry of Home Affairs said after May 3, when the nationwide lockdown imposed to curb the spread of Covid-19 was scheduled to end, restrictions on movement of people will span only night hours (between 7 pm and 7 am), while private offices can operate with 33 per cent of employees even in urban areas, most of which are classified as red zones.
 

“The relaxation to many industrial activities including industrial establishments in urban areas such as Special Economic Zones, industrial estates and industrial townships with access control within the red zone with restrictions, is absolutely in line with what Confederation of Indian Industry (CII) had been asking for and we especially welcome it,” said Chandrajit Banerjee, CII director general.

The government also allowed the production of information technology hardware, jute and packaging material in red zones, along with construction activities with requisite restrictions.

While the Centre has said the relaxations will be subject to clearances from state governments and local authorities, it strictly bars them from providing further relaxations. “It is imperative that lower level authorities get the power to use their discretionary judgement to provide specific relaxations in areas where they can be freely given,” Banerjee added.
 

Industries have also cheered the government’s move to allow the movement of individuals and vehicles with restrictions for permitted sectors. “In the orange and green zones, buses have been allowed to operate with up to 50 per cent capacity. This will partly ease the pressure on companies, which have struggled to ferry employees to and from industrial units,” said a senior functionary of the Federation of Indian Chambers of Commerce and Industry (Ficci).

Fiscal stimulus
 

However, demands for a stimulus package continued to gather steam. “While a regular assessment of the zones and activities is required to further relax the opening up of business activities, it is also now opportune time for the government to come up with the financial package, especially for the micro, small and medium enterprises, and for industry on the whole,” said Sangita Reddy, president of Ficci.

This was echoed by others as well. “Businesses across different sectors, be it hospitality, construction, logistics, manufacturing and trade find themselves locked up in grave financial woes. Fixed costs such as wages, electricity, rentals, communication are hard to meet even as operational losses are inevitable. Such a dire state of affairs demands a large fiscal stimulus, even if it requires monetisation of fiscal deficit by direct lending by RBI to the government,” said Assocham Secretary General Deepak Sood.

Assocham has also petitioned the government to include reduction in goods and services tax rates, government guarantee to banks for lending to weaker businesses, release of all government dues, and restructuring of loans in a possible stimulus.