Govt should provide Rs 3-trn stimulus to perk up domestic demand: CII

Industry body also seeks expansion of RBI balance sheet to meet demand exigencies, suggests ways to accelerate Covid vaccination

India’s gross domestic product (GDP) needs to improve to 9 per cent by 2024-25 with public expenditure, reforms and vaccination as key levers, Confederation of Indian Industry (CII) president TV Narendran said on Thursday, while urging the government to provide a fiscal stimulus worth Rs 3 trillion, along with direct cash transfers to perk up domestic demand.
 
Addressing the media, virtually, for the first time after taking over as the CII president, Narendran said, “The cumulative impact of the two waves on income and consumer sentiment, coupled with the increase in household medical expenses during the second wave, is likely to affect consumer demand for some time. As the economy reopens after the second wave, the government strategy is required to boost consumption and support industry till dema­nd is well-entrenched.”
 
For the current fiscal year, CII has pegged India’s GDP growth rate at 9.5 per cent. “With recent uptick in mobility indicators, traffic congestion index and daily railway passenger movement, we believe that 9.5 per cent growth rate can be achieved this year,” Narendran, chief executive officer and managing director at Tata Steel Limited, who took over as the CII president on May 31, said.
 
The body further asked for expansion in the Reserve Bank of India (RBI) balance sheet to meet the demand exigencies of the pandemic.
 
As businesses reopen, their credit needs must be met and the financial sector should be able to absorb pandemic-induced non-performing assets. A corpus might be set up as a pandemic pool to cover the risk of losses from future pandemics, he said.

TV Narendran, CII President

 
Narendran also called for supporting the industry through increase in Emergency Credit Line Guarantee Scheme (ECLGS) to Rs 5 trillion, along with extension of the scheme to March 31, 2022 and inclusion of more distressed sectors such as retail. He further suggested long-pending structural tax reforms such as inclusion of ATF and other fuel products under GST be considered, and listed a range of measures for accelerating vaccination.
 
Narendran suggested appointment of a minister of vaccination to accelerate the jab drive, including in rural areas, procurement and distribution of vaccines to states based on scientific criteria and monitoring progress through a daily dashboard.
 
According to CII estimates, an average of about 71 lakh daily vaccinations are required from June to December 2021 to administer at least a single dose to all adults. For this, the vaccine availability must increase two times, it said.
 
The government should fast-track all necessary licensing requirements and pay in advance for purchases, besides providing capital subsidies to incentivise production, the CII said.
 
The IP owners of vaccines should issue licenses for mass manufacturing with transfer of technology, it added.
 
Noting that a third wave is a possibility, Narendran asked district administrations and the private sector partner to set up Covid Care Centres in rural areas. Free land, deemed clearances and tax benefits could be extended for this, he said.
 
CII also suggested a national oxygen development plan to create an oxygen ecosystem. CII is aiming to set up E-ICUs in rural areas across 12 states, for which pilot projects in Maharashtra and Haryana have been successful. The CII E-ICUs will have testing and diagnostic facilities and oxygen generation capacities. The body has also drafted a Code for Industry Staff Welfare to provide relief to families of employees who succumbed to Covid-19.