Necessary: a national economic recovery plan – analysis
Prime Minister Narendra Modi’s call for a first janata curfew on March 22 was made by the people, for the people. It symbolized India’s determination to fight the deadly coronavirus disease (Covid-19) that has brought global social life and economy out of life. With an increasing number of cases in India, we must be prepared to face a growing social and economic crisis.
While the public health care system at both the central and state levels faces the challenge, the private sector is also fully prepared to assist and support the State in testing by making beds and quarantine facilities available. for treatment, training health caregivers, in addition to providing help lines 24 hours a day, 7 days a week and spreading awareness through social networks and other similar tools.
With the government allowing testing and issuing guidelines for testing in private laboratories, it is necessary to increase testing and treatment capabilities. The private sector has been in close contact with the government on public-private partnerships (PPPs) related to Covid-19. A powerful ecosystem will soon evolve through PPP to address the medical concerns of this crisis.
There is no place for complacency. Public adherence to self-isolation is extremely critical. In addition, a combination of health responses, increased public discipline, and timely identification of vulnerability, both in relation to health care and the economy, is vital to meet the challenges posed by the spread of the disease.
On the economic front, although companies have been asked not to reduce their employees, we must also focus on the unorganized sector, where daily wage earners will be seriously affected. A methodology for transferring money directly to your accounts is critical.
The industry has been actively involved in supporting the government in data collection and reporting and in analyzing the impact of Covid-19 in all sectors and across the country. In particular, the Federation of Indian Chambers of Commerce and Industry (FICCI) has developed a guide for organizations based on best practices worldwide. A survey by FICCI shows that there has been a great impact on companies even in the early stages of the crisis. Therefore, in the future, with containment measures, it is important to work on a national reconstruction plan to address the damage to the economy.
In recent quarters, the Indian economy has experienced a significant slowdown and is in serious danger of posting growth below 4% in the coming quarters. To make matters worse, the pandemic has severely impacted efforts being made toward economic recovery and has derailed several important sectors: tourism, hospitality, aviation, financial markets, manufacturing, and information technology. There is an urgent need to address weaknesses in the industry that could help minimize the impact on the economy in general, and on Indian companies in particular. Unquestionably, this requires a combination of monetary, fiscal and financial market measures.
The role of the working group made up of the Prime Minister and led by Finance Minister Nirmala Sitharaman will be essential in framing a national reconstruction plan.
The main requirement in the reconstruction exercise is to relax the mandatory presentation rules and defer / waive the payment of interest and the tax obligations of the companies affected by the outbreak. In addition, maintain liquidity at surplus levels and special liquidity support for companies, non-bank financial companies and banks that are under pressure due to intensifying risk aversion in financial markets or due to major shock demand will also be crucial.
All payments for principal, interest and tax service must be deferred by two quarters at this time. These two quarters should not be considered for the calculation of non-productive assets.
As an industry body, the FICCI makes several recommendations to the government for consideration as part of this exercise. In crisis resolution, it is important to look for a positive side. We must look for potential opportunities even now. Companies that include pharmaceuticals, chemicals, solar energy, electric vehicles face disruptions in supply chains due to the impact of the virus in China. A concerted strategy for them must be developed along with special considerations for the manufacture of critical items in the healthcare sector.
At one extreme, social distancing, work from home, and public curfews keep people separate. However, in countless ways, they are uniting the world’s largest democracy as a collective force. In response to the Prime Minister’s direction, various individuals and organizations have come forward to assist the vulnerable; some by reducing their wages, others by paying wages to their staff and supporting workers during self-quarantine. There is a long list of sacrifices that are being made. We need to go into mission mode to defeat the spread of Covid-19 and build a new, stronger, and healthier India. Together, let’s make this happen.
Sangita Reddy is Joint Managing Director, Apollo Hospitals Group and President, FICCI
The opinions expressed are personal.