With the Coronavirus forced lockdown in place, businesses throughout the country have been impacted severely leading to job losses and pay cuts across industries. In light of the following events, Federation of Indian Chambers of Commerce and Industry (FICCI) President Sangita Reddy has written a letter to Finance Minister Nirmala Sitharaman requesting help for small-scale industries. FICCI has also called for an 'immediate need' for a stimulus of around Rs 9-10 lakh crore or 4-5% of the GDP to stimulate the demand and supply, in an attempt to avert a long-term economic slowdown.
In the letter to the finance minister, the FICCI President has also warned of 'massive job losses' leading to further pressure on the utilisation of businesses and their liquidity. Reddy also apprised that the situation will reduce government tax collections and fiscal deficit will remain high if the economic engine does not restart. "The socio-economic impact of large-scale job losses and loss of demographic dividend will impact the future course of economic development even in medium-term," she added.
Furthermore, Reddy also urged for interest-free and collateral-free loans to MSME companies with a turnover of less than 50 crores for up to 12 months period depending on the sector to enable them to cover fixed costs, salaries and other operational expenses and an alternate mechanism for non-GST paying companies.
She has also suggested to create a 'COVID liquidity bridge' to support restructuring and additional loan requirement of large companies whose balance sheets have got impaired due to the pandemic. "This will have a huge positive impact on the entire supply chain of these companies, including many small and mid-sized vendors, which otherwise may not survive the current crisis," Reddy added.