ASSOCHAM suggests war-footing steps to deal with Covid-19 virus; seeks moratorium on all debt repayments

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New Delhi, 19th March 2020 : Suggesting ”war-footing ” measures to mitigate the impact of Covid-19 virus on the Indian economy, the ASSOCHAM has sought a moratorium on debt-servicing along with a big cut in the interest rates, besides protecting vulnerable sections of the society by direct cash support of Rs 3,000-5,000 per month and providing tax credits to firms which protect employment in a situation of grave worldwide health emergency.

“The time to take action is right now; we need implementation on a war footing if we are to save the Indian economy from tanking, ” said ASSOCHAM President Dr Niranjan Hiranandani, suggesting a slew of measures to deal with a situation which is unprecedented in the living memory.

The ASSOCHAM has impressed upon the Reserve Bank of India to immediately announce a moratorium for debt-servicing (principal and interest) and a big reduction in the lending rates. Besides, the RBI should restructure bank loans across the board with adequate forbearance.

Besides the RBI , the government should announce a moratorium on rating surveillance with advice to the rating agencies that they may refrain from downgrading the companies during this period of extra-ordinary crisis.

Dr Hiranandani said massive bail-outs have been announced by the central banks and the governments in major economies of the world in the fast evolving situation with trade and businesses coming to a halt in lockdowns in country after country in Europe and partiially in the US. ” We are confident that the RBI and the Government would soon be announcing similar measures in India,” he said.

In a joint position paper prepared by the ASSOCHAM and consulting firm, Primus Partners, a strong case has been made for the government to extend an immediate relief of Rs 3,000-5,000 per month , for a few months, to those working in the sectors affected the most by the virus. Street vendors, construction workers, auto drivers and temporary workers can be covered under the scheme which can implemented through the Jan Dhan accounts in the banks.

The government may also provide tax credit to companies that extend two weeks of paid sick leave to meet the quarantine time frame for any employee and his/her family. Relief in the tuition fee for the students from the poor sections of the society may also be considered while the Ayushman Bharat health insurance scheme be implemented more vigorously.

Urgent relief and lines of credit be provided to the worst hit sectors such as Tourism and Hospitality, Aviation, FMCG and Retail. To boost consumer confidence and liquidity, the government can consider a payroll tax holiday for a quarter. Extending such relief can be targeted to workers within a certain tax bracket to support low-mid income groups.