The COVID-19 crisis has brought into sharp relief an indiscriminate correlation: saving human lives is important, but ensuring livelihoods is equally significant. As the authorities with support from India Inc go about the challenge of saving lives, the current is one of safeguarding the economy. Business organisations need to remain solvent; jobs need to be saved. As the Indian economy faces an unprecedented crisis on account of the Covid19 pandemic, one of the biggest worries for it is that global investors may take over distressed Indian companies at very low-price points, unless bankruptcy and insolvency laws are temporarily suspended. Global investors are waiting for Indian stocks to fall in value so that they can take over listed companies at throwaway prices. We have seen the first such attempt in the last few days. In order to ensure that Indian companies remain Indian-owned, suspension of the NCLT law for at least six months is imperative to salvage the capital erosion. Exceptional measures are required to thwart one of the deepest recessions recorded across the globe.
The Indian economy looks upon the authorities to follow global trends and help pull industry out of the economic maelstrom by instituting a stimulus package that’s at least 10 per cent of the nation’s gross domestic product (GDP). Salvaging the Indian economy requires an urgent booster dose of nearly $200 billion, which needs to be pumped into the market in a staggered manner, effectively retrieving the business cycle without incurring further economic losses. Across sectors, business organisations are seeking working capital to ensure that the economy doesn’t tank, that they don’t default and saddle banks with NPAs, and consequently result in job losses. The economic turmoil can rightly be equated with cancer. And the fiscal stimulus required should not end up being something like an Aspirin or paracetamol tablet, lacking the bandwidth to cure the deeper and bigger ailment that the nation is enduring. In other words, it requires chemotherapy to combat the economic meltdown. India Inc will play its role in ensuring that while the medical aspect of the Covid-19 challenge gets handled under the best central and state leadership, Indian businesses will work to mitigate the aftermath as best as they can. This second aspect needs to be dealt with quickly. If we can overcome the crisis today, we may be able to stand up tomorrow. There is a need for a onetime rollover for debt restructuring as also for provision and working capital requirement — these are ‘must dos’ as part of the economic stimulus package. More credit supply needs to be extended to industries across the economy.
Deficit financing, if needed, can be implemented. Partial uplift for construction workers is needed to finish the abrupt stoppage of work with the sudden lockdown. The situation is bleak; we need to ensure that we come out of this not just alive, but also with a vibrant, functional economy.
Saving lives is important, but saving livelihoods even more so
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