Announce stimulus package soon, says India Inc.

Prime Minister Narendra Modi’s decision to extend the nationwide lockdown till May 3 to contain the spread of the Covid-19 pandemic was a case of a trade-off that the government needed to make between lives and livelihoods, says India Inc.

In his address to the nation on Tuesday morning, Modi stated that India was in a relatively better position compared to many other countries, vis-à-vis the spread of the pandemic. Nonetheless, the number of Covid-19 positive cases reported in India has risen sharply over the last few days and a consequent extension of the lockdown was widely anticipated.

However, the impact of an economy that has been shut down since March 25 on the livelihoods of people, especially the economically weaker sections, has been severe. Keeping this in mind, the government has decided to evaluate the situation in the states and districts across the country till April 20, and partially lift the lockdown, thereafter, in those areas where the spread of the Coronavirus appears to have been contained.

“It is a trade-off between protecting lives and livelihoods and the government appears to have taken sides with protecting lives at the moment,” says Harsh Mariwala, chairman, Marico. “It is important to reopen economic activity in a graded and strict manner since the biggest fear is that if they open up everything at one go, people will start crowding the streets again.”

Economic activities like opening up factories, restarting agricultural activity and opening up markets could be allowed in areas where there have been no new or very few Coronavirus cases, Mariwala said. Modi stated that the guidelines for the conditional relaxation of the lockdown in certain areas across the country would be issued on Wednesday, April 15.

“I am sure it was a difficult decision to extend the lockdown till May 3, but I believe that it was the right decision. It is up to all of us to ensure that the PM doesn’t have to extend it further,” said Pawan Kumar Goenka, managing director and chief executive officer, Mahindra and Mahindra.

While protecting lives at this critical juncture is of paramount importance, India Inc. also pointed out that the government needed to announce a support package for industry at the earliest. This would provide some succour to companies and help stave off job losses.

“It is important for the government to announce an economic relief package immediately to ensure that companies don’t get into a mentality of scarcity and start laying off employees,” Sangita Reddy, joint managing director, Apollo Hospitals Group and president of the Federation of Indian Chambers of Commerce and Industry (FICCI) told CNBC-TV18. FICCI has earlier stated that Indian industry needed a stimulus package of ₹9-10 lakh crore.

RPG Enterprises chairman Harsh Goenka stated that the extension of the lockdown was on expected lines and a bold move. “I am hopeful that the government will handhold all stakeholders to mitigate the humongous crisis that humanity is facing in terms of health, employment, and availability of food,” Goenka said.

“Instituting overseas travel bBan, imposing stay-at-home and social distancing across India, much before many leaders in the West, was a very sound decision by the PM. It has helped save India from an otherwise potential disastrous situation," says A.P. Hinduja, chairman, Hinduja Group of Companies (India). "Extending these measures though painful in short term, will only help flatten the curve of the pandemic here and save lives. To alleviate the pain, it is important that the PM backs this up with an economic stimulus so that industrial flow is revived, buffer is created for SMEs and money is put in hands of the poorest of the poor."

Bhavin Turakhia, founder and chief executive officer of Flock and chief executive and co-founder of Zeta, stated that India’s startup sector was facing a tough time due to the Covid-19 pandemic. “With startups working on limited cash flows, we believe the government should support them in these testing times,” Turakhia said. “One measure that the government stated it was considering was the suspension of Sections 7, 9 and 10 of the IBC [Insolvency and Bankruptcy Code] for a period of six months if the lockdown extends beyond 30th April. If implemented, this will surely bring some relief to many young startups and help them sustain their business. Other measures which should be considered include the easing of compliance and filing guidelines for startups by eradicating the current penal provisions, while offering financial tools to help them overcome this eventuality.”

India’s large information technology (IT) services sector is also hoping that partial relaxation of the lockdown in relatively safe areas would help some of the staff across IT companies come back to office.

“The extension announcement by the government till May 3 will help India to build on the containment strategy of the last three weeks and also strengthen our readiness to support the post lockdown phase,” industry body NASSCOM said in a statement. “We are also happy to note the relaxation of restrictions in green zones (where Covid-19 cases have reduced) and hope the government will also announce the economic stimulus packages soon so that we can start focussing on rebuilding the economy.” IT-BPM (IT-Business Process Management), being an essential service, is committed to take all precautions on hygiene, sanitisation and ensuring all necessary guidelines are followed by the industry and employees, the statement added.

Meanwhile, the extension of the lockdown is expected to further hurt the health of India’s aviation sector, which is already one of the worst affected due to the Covid-19 pandemic. Soon after Modi’s address, the Directorate General of Civil Aviation tweeted that all domestic and international airline operations shall remain suspended till 11:59 pm on May 3.

“For airlines, removal of the lockdown will only make sense if states also remove local lockdowns and allow free access to and from the airports,” said a senior airline executive, who didn’t wish to be named. “Airlines will struggle to meet the direct cost of operations as long as every other seat has to be kept empty for social distancing. But most of all, airlines will not be able to regain their footing until public confidence to travel is back, which can only happen when the fear of the virus itself dies down.”

(Anshul Dhamija contributed to this story.)