Top India Inc representatives, in an unusual video-conference meeting with Prime Minister Narendra Modi on Monday, sought a fiscal stimulus for industry to battle the coronavirus crisis that has forced factories and offices to shut down indefinitely.
The business leaders, including Hindustan Unilever Chairman and Managing Director Sanjeev Mehta, TVS Chairman Venu Srinivasan, and Piramal group Chairman Ajay Piramal, also told the PM that monetary incentives must be given to the vulnerable sections.
Modi had called the virtual meeting to discuss possible solutions to the rapidly declining industrial production after the government decided to shut down around 80 coronavirus-hit districts, with further plans to introduce similar steps for other major urban centres.
Federation of Indian Chambers of Commerce & Industry (Ficci) President Sangita Reddy, as well as her counterpart in the Confederation of Indian Industry (CII) Vikram Kirloskar, attended the meeting, along with other members. They were united in the idea of direct cash benefit transfers to the economically vulnerable population.
Both industry bodies have called for cash transfers of Rs 5,000 each to workers and those earning below Rs 5 lakh as well as a one-time payment of Rs 10,000 for senior citizens. The PM was keen on knowing the details of the proposed cash transfer which may boost the stagnating consumer demand, multiple people present in the meeting said.
Passengers wait for a DTC bus outside Sarai Kale Khan Bus stand after lockdown in the wake of coronavirus pandemic in New Delhi. Photo: PTI
Overall, industry has sought relaxed loan provisions and measures to boost liquidity. “All borrowers should be given a three-month moratorium on all loans and all repayment obligations should be suspended for this period. The CII also emphasised that there is an immediate need to facilitate and enable advances for ways and means for industry across sectors and the government could perhaps explore options of a moratorium on interest and principal for the next three months,” Kirloskar said. He added the government’s priority should be on 'flattening the curve’ or reducing the number of new infections as soon as possible. The CII has also called for dollar-liquidity swap as India is in a comfortable position as far as its dollar reserves are concerned.
Similarly, Ficci has suggested that the government must take a 200-basis point hit to the fiscal deficit target, which can bring about Rs 4 trillion worth of liquidity in the system. “No further accounts should be considered as non-performing assets from March 16 onwards, while the payment of standard loans should be deferred by two quarters. Aside from bank loans, liquidity should also be maintained for commercial papers and corporate bonds,” Reddy said. Ficci has also argued that no new cases should be opened under the Insolvency and Bankruptcy Code at the National Company Law Tribunal for companies affected by coronavirus.
The chambers reiterated that none of the moves being sought by them would have any major negative financial implication for the government.
At the meeting, Modi stressed that supply of essential items should not be impacted, while black marketing and hoarding must be prevented. However, TVS Group's Venu Srinivasan pointed out that clarifying what constitutes an essential item remains a problem. "Now, a lot of stocks are trading at less than 50 per cent of two years ago. When the bulls come back, it will be a 'V' shaped recovery," he added.
Heeding the government's call to burden more responsibility, business leaders have also assured the PM that workers will not be laid off casually and firms would try to guarantee the financial safety of the most vulnerable. For instance, CII members will dedicate their plant facilities to help scale up manufacturing and availability of essential equipment needed to deal with the medical emergency linked to ventilators, sanitisers, essential drugs, medical services, on a no-profit basis.
Ficci members plan to support up to 5,000 new medical beds by converting hotel rooms into medical facilities. The industry body is working with Niti Aayog to produce beds and ventilators for isolation and quarantine, and is sharing data for virus testing practices. Besides Mehta, Srinivasan and Piramal, other business leaders to log into the meeting included Rajan Bharti Mittal, Uday Kotak, Pankaj Patel and Harsh Pati Singhania.
Biz wish list
*Rate cut of 50 to 100 basis points to boost lending and liquidity
*Dollar-liquidity swap since dollar reserves remain comfortable
*A moratorium on interest and principal for the next three months
*Deferment of payment of standard loans and interests by 2 quarters.
*All EMIs should be back-ended and deferred