Mumbai: Industry body Assocham on Thursday urged the government to roll out a $100-120 billion stimulus package to help revive all sectors of the economy, which has been battered by the coronavirus outbreak and the subsequent nationwide lockdown.
Stressing that the Reserve Bank’s decision on key policy rate cut and measures to infuse liquidity could just be seen as a “quick short term fix”, Assocham Secretary General Deepak Sood said the government would need to do much more in the immediate future.
“This could include the central government making use of the current scenario, wherein the gloom of deflation as well as recession, and no threat of inflation hovers around the economy, to take advantage of the prevailing fiscal deficit present in the financial system, and put together a stimulus package of about USD 100 to 120 billion that is sure to help revive all sectors in the country,” Sood said.
India also stands to gain around USD 50 billion in fuel import bill due to the fall in global crude prices, he said in a statement. According to the chamber, the government may go in for temporary suspension of the Fiscal Responsibility and Budget Management Rules (FRBM) Act.
The legislation, enacted way back in August 2003, was passed with the aim to make the central government responsible for ensuring “inter-generational equity in fiscal management and long-term macro-economic stability”.
“This move needs to be carried out to ensure that administrators within the current government at the centre, maintains the nation’s finance with regards to revenue and expenditure in an organized manner, so the future generation does not inherit the burden of dealing with unsustainably high levels of debts,” Sood said.
Assocham further said during this nationwide lockdown, it is the vulnerable sections that are bound to suffer the most. Under such circumstances, they need to be provided with financial support in the form of an appropriate monetary package without the government reeling under the cloud of the FRBM Act, it added.
On measures taken by the RBI, Sood said while those are appreciated, “I certainly believe that it may not be enough in the long run.”
The RBI moves may certainly stop the economy from a total collapse at the moment, but it, however, won’t be enough to get the economy back on track to where it was, he added.
Sood also expressed apprehension that there may be a rise in non-performing assets after the moratorium on payment of term loans comes to an end.