March 17, 2020
PHD Chamber suggests SEVEN prong strategy to mitigate the impact of Corona Virus on trade and industry
While expressing concerns and apprehensions on the impact of Corona Virus on India’s trade and industry, Dr D K Aggarwal, President PHD Chamber suggested a seven prong strategy to mitigate the impact of Corona Virus on trade and industry.
Firstly, as there is a drastic fall in the business activities, vis – a vis lower domestic and internal sales, the working capital requirement of the businesses has to be addressed by increasing the working capital limits of business enterprises by 25% and no new application should be required to be filed for this purpose, said Dr D K Aggarwal.
Secondly, Dr Aggarwal has suggested to reduce the cost of capital by atleast 100 basis points by instructing banks to pass on the benefit of earlier cuts and also cutting the Repo Rate from the current levels of 5.15 %. Also create enough liquidity for the businesses and the lower interest rates will help to maintain and rejuvenate domestic demand, said Dr Aggarwal.
Reduced cost of capital will enhance the competitiveness of exporters in international market and help exporters to grab the opportunity of slowing China’s global exports with increased markets share of India, said Dr Aggarwal.
Thirdly, crude price has come down substantially but in India due to higher fixed excise duty and central and state VAT, the petrol and diesel prices have not come down. To boost and hand hold the Indian industry in these difficult times, we suggest to reduce Excise duties and VAT on petroleum, diesel and allied products by atleast 25%, to bring down the prices of petrol and diesel by Rs 9-10 per litre. This will be a big relief to the industry, will boost and kick start growth, while reviving the spirit in the economy, said Dr Aggarwal.
Fourth, as MSMEs are not that much strong in their financial requirements ,at this juncture a special category fund for the MSMEs to fund their finance needs will be crucial to save them from the Corona shock, said Dr DK Aggarwal.
Fifth, government needs to enhance the consumption expenditure in the economy as increased domestic demand will help manufacturing sector to grow and maintain the capacity utilization , said Dr Aggarwal.
Sixth, the allocation of Rs 102 lakh crore made for the National Infrastructure Pipeline for next five years needs to be implemented for the coming Financial Year, as increased spending in infrastructure will give a multiplier effect and rejuvenate the aggregate demand in the economy and mitigate the impact of Corona Virus of the growth trajectory of the country, said Dr Aggarwal.
Seventh, the outbreak of Corona virus has adversely affected the supply chains in China. The manufacturing operations in the country have been disrupted as significant number of companies have temporarily shut their assembly and manufacturing plants.
To benefit from China’s decreased manufacturing production due to the Corona virus outbreak, the government needs to build up a well integrated and competitive supply chain logistics including increase the number of cargo containers to meet the growing global demand of Indian spices, ceramics, home-ware, fashion and lifestyle goods, textiles , engineering goods and furniture, among others, said Dr Aggarwal.
PHD Chamber of Commerce and Industry