The Ministry of Finance officials are conducting frequent meetings with corporate leaders to seek input on the next phase of stimulus package as it aims to revive sectors severely impacted by the pandemic, including tourism, hospitality and construction. Corporate leaders have put forth their proposals to the Ministry of Finance as well as the Reserve Bank of India. However, the key to Stimulus 2.0, officials believe, is the timing.
Corporate houses have also put the onus on the RBI to revive growth. The members of the industry also pointed out to RBI Governor Shaktikanta Das banks’ risk aversion amid fears of rising NPAs. They said that this is hurting the business community.
HDFC Chairman Deepak Parekh pointed out that restructuring loans would help firms in the longer run and provide ammunition to tide over the next few quarters. He, however, advocated against extension of moratorium beyond August 31 as he believes that even the ones who can repay are exploiting the situation for financial gains, resulting in stress to the lenders.
Bharti Enterprises’ Vice Chairman Rakesh Bharti Mittal suggested considering moratorium extension to alleviate the stress on corporates and the economy. Meanwhile, Vinayak Chatterjee, Chairman of Feedback Infra said that thinking outside the box is the need of the hour and suggested a separate fund for businesses.
The RBI Governor said that all suggestions have been noted and the apex bank would conduct internal discussions on the same.
CORPORATE SECTOR DEMANDS
Despite the Rs 20 lakh crore package by the government, the economic growth has not shot off. Some of the demands on reviving businesses that the corporate leaders have presented to the government are:
- Setting up of a separate COVID-19 fund for various sectors.
- Relaxing of FDI norms to entice more investment in the country that would in turn boost the economy.
- Banks loosening their purse strings — something that was unanimously voiced by the sector.
- Restructuring of loans to make businesses battle-ready for upcoming quarters.
RIGHT TIMING FOR STIMULUS 2.0
Government officials believe that the timing of the package has to be precise for the stimulus to have any impact. Chief Economic Advisor Krishnamurthy Subramanian said, “I will emphasise again that the government is willing to do what is necessary in terms of government spending, but the timing of this is extremely important. Now that there is news coming that vaccine may not be actually very far off, once we have the vaccine then the uncertainty that people have will go down significantly. And till we have the uncertainty, even if people have money in their pockets, they may actually decide to keep that in their banks as saving accounts.”