Relief measures announced by govt, RBI not enough, says India Inc

Topics Coronavirus | India Inc | Lockdown

An overwhelming 96 per cent of the CEOs surveyed want the extension of the moratorium on loan payments to three months, which was announced by the RBI, to be further relaxed to at least a year
India Inc is near unanimous in its view that the relief measures announced by the Reserve Bank of India (RBI) and the government are not enough, even as it seeks a comprehensive stimulus package from the state to combat the adverse impact of Covid-19 on their businesses.

The finding is based on a quick survey of 25 CEOs representing big companies in areas ranging from financial services and banks to energy, automobiles, ports, consumer electronics, IT and internet, real estate companies and also large business conglomerates.

An overwhelming 96 per cent of the CEOs surveyed want the extension of the moratorium on loan payments to three months, which was announced by the RBI, to be further relaxed to at least a year to even two years. And, of course, all of them are pushing for a stimulus package from the government. Many also point out that the Insolvency and Bankruptcy Code (IBC) rules need to be made flexible — such as the deferment of proceedings for six months from the date on which the lockdown is lifted.

Says Venu Srinivasan, chairman of TVS group: “The moratorium on loan repayment should be extended. More importantly, NPA recognition norms should be relaxed as well. Otherwise, the NBFC industry will go bankrupt. Also, IBC proceedings should be deferred by six months for all micro, small and medium companies.

Harsh Goenka, chairman of RPG Enterprises, expresses a similar view: “The government has to pump in money to revive demand. But industry is looking for relief in the payment of taxes, statutory dues like PF and ESIC (three months’ payment to be deferred without interest and penalty), as well as employment relief (like reimbursement of minimum wages to companies which have paid contract workers) and increase in working capital limits from 10 per cent to 25 per cent.”

Clearly, industry is pushing for a much bigger package than what is being considered by many in the government. The managing director of a leading diversified conglomerate says: “The total package should be US $100 billion, first for the poor, then the self-employed, micro, small and medium sector, in that order.” A CEO of a leading ports company suggests that 10 per cent to 15 per cent of the GDP should be given as relief “to all those contributing to the GDP.”

The CEOs are divided on whether the country will go into a recession, though all agree that there will be a slowdown. While 40 per cent of the respondents say that recession is inescapable, the rest are more positive and believe that there will be some growth, ranging from 1 per cent to 3 per cent.

And though about 60 per cent of the respondents said that they would not cut pay or sack their employees, about 12 per cent said they have no option but to do so. The rest said that they did not know yet what they would do, and that decisions would be taken only in the future.

There is, however, a consensus amongst more than half (52 per cent) of the respondents that the lockdown should be partially lifted after 14 April. The discussions between Prime Minister Narendra Modi and some chief ministers on Thursday suggest that this might happen in a staggered manner. But others say that life is more important than business — 28 per cent of the CEOs feel that the lockdown should continue for another 15 days.

“I am surprised that in many of the CEO forums on video, corporates are keen to start business rather than concentrate on the risks to health,” says the CEO of a leading internet company. Those favouring a partial lifting of the ban have suggested different models for a staggered reopening. Says the CEO of a financial services company: “There should be transport across city lines and state lines so that migrants can go home. Secondly, large industrial outfits should be opened, and also infra projects which generate employment to wage earners and small shops — but not malls.”

Others have suggested opening up in clusters in cities. “The government should identify red hotspots and seal them, identify orange hotspots and open them partially and identify green spots and open them liberally,” says a Mumbai based CEO.

(With inputs from T E Narasimhan, Shine Jacob, Shreya Jai,  Avisek Rakshit, Samie Modak, Rajesh Bhayani, Aditi Divekar, and Namrata Acharya)

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