Modi’s Rs 21 lakh cr package not enough; industry says govt needs to do this for companies to survive

Given the major disruptions caused by the coronavirus pandemic, the industry has asked for increased government spending, direct cash transfers to consumers, and deferment of taxes.

Even as the Narendra Modi-led government rolls out a special economic package as big as Rs 21 lakh crore, the industry has called it insufficient and has demanded more heavy lifting from the centre to boost demand in the market. Given the major disruptions caused by the coronavirus pandemic, the industry has asked for increased government spending, direct cash transfers to consumers, and deferment of taxes. In a survey conducted by a national trade body with responses of over 100 companies, most companies said that the stimulus package of the government did not benefit them and it was ineffective, The Indian Express reported. Many companies also said there was little fiscal support either to the industry or to the poor.

The survey was conducted after Finance Minister Nirmala Sitharaman detailed out the economic package that included measures to ease the financial burden of people and businesses. In the survey, it tuned out that bigger companies have resumed operations at higher capacities while mid and small-sized companies in the same or related sectors are operating at lower capacities.

Among other trends that emerged from the survey, it was found out that many small IT services firms were operating at half of their capacities. Chemical companies are also lagging behind in capacity utilisation even as pharma manufacturing units are operating at over 85 per cent capacity. Automobile units, which hold a large share in the manufacturing sector, have deliberately slowed their operations on the back of low retail demand and people’s uncertainty on the job front and wage cuts.

However, the firms related to fast-moving consumer goods (FMCG) or those producing essential commodities and food products have been able to scale up fast, and are operating at over 80 per cent capacity. The government had recently made many announcements to lift sentiment and to add liquidity in the market but the profound uncertainty and demand crisis have restricted the centre’s move to quickly alleviate the industry’s pain. Meanwhile, RBI Governor Shaktikanta Das has said that the Indian economy will likely face contraction in the current fiscal and the near-term outlook of the economy will be heavily based on circumstances.