As COVID-19 cases climb, all eyes are on economic task force

From direct cash transfers of the needy to loan and tax payments to bank accounts and immediate rate cuts to GST relief, expectations are huge and desperate for the COVID-19 economic task force.

The Indian economy growth engine, which had already been slow for more than a year, threatens to derail completely after the coronovirus epidemic and the subsequent decline of economic activity. Sectors such as travel, hospitality and manufacturing have made considerable headlines, while MSMEs are at risk of being lethal, along with short-to-medium term prospects for the unorganized sector.

The COVID-19 Economic Task Force headed by Finance Minister Nirmala Sitharaman announced Prime Minister Narendra Modi in his address to the nation on Thursday night. Immediately, Sitharaman held meetings with ministers of civil aviation, tourism, MSMEs, fisheries, animal husbandry and dairy. The meetings were more to assess the effect of coronovirus on these areas, as no subsequent necessary measures were announced.

“We had a detailed discussion in the presence of Finance Secretary and Economic Affairs Secretary. We are compiling his suggestions, “Sitharaman said later, more meetings will be held in the coming days.” It will be difficult to give the timeline but (announcement of relief package) will be made as soon as possible. “

Sitharaman may not have the luxury of time if the graph of patients is increasing day by day and even more economic activities are in stalemate. Many states and cities are already in various stages of lockdown. Sunday’s Janata curfew could be a pre-cursor to a full national lockdown and a long period of termination of businesses, as is happening in many parts of the world, particularly Europe.

Various industries and trade bodies have called upon the government to take action keeping their suggestions in front. One of the more popular demands is the direct bank transfer of cash for the dire needs of casual laborers, daily laborers and the elderly. If implemented, it will test the precision and efficacy of the Aadhaar-based direct benefit transfer method.

In a letter to the Prime Minister, CII President Vikram Kirloskar called for working for the GST rules. “GST payment should be on collection of bills on increasing invoices. This will help in avoiding liquidity in the event of delay in payment, ”he wrote. Kirloskar called on the government to quickly pass pending payments due to the industry, as well as removing the long-term capital gains tax and fixing the dividend distribution tax at 25 percent.

With manufacturing and retail equally affected, industry bodies have already begun to struggle for a repo rate cut as well as a fiscal stimulus. “We urge the necessary incentives to reduce the economic difficulties posed by the coronovirus epidemic,” said Avnish Sood, director of the real estate company Eros Group. Realty wants the government to do it.

Another industry body, Assocham, has called for a one-year deferment on bank loans and easy lending to small businesses to face the crisis. The Finance Minister suggested in his note handed over on Saturday, “Seven times the net debt of MSMEs can be raised to net worth through loans (NBFCs)”. He said, “LIC can chip 10-year redeemable or convertible preference shares with equity-equity equal to its net worth.”

One proposal is to extend the time period in classifying a non-performing asset (NPA). Currently three months, there is a demand from many professional bodies to do it six months. Similarly, the Federation of All India Traders has urged the government that given the situation, the deadline for filing income tax and GST and depositing tax should be extended to three months, while all types of bank loans, EMIs and utilities. Should be paid. To be postponed for the next six months, with no interest on the extended period.

As various sectors, organizations and even state governments continue to seek remedial measures, it will be interesting to see how much Sitharaman’s task force will weigh on it. Especially in view of weak government finances. And if the action is spoken louder than words, the central government is getting a stay from the Supreme Court to stop the recovery proceedings by the tax department and banks on Friday from the Allahabad High Court, along with orders from the Kerala government. “Even those who pay taxes and file returns will stop doing so,” the government had said, against any temporary withholding for loans and tax payments.

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