Economy requires Rs 4.5 lakh crore fiscal support at current juncture: Ficci to FM

Team Udayavani, May 11, 2020, 6:48 PM IST

New Delhi: Seeking immediate support for the Indian economy hit by COVID-19, industry body Ficci said an additional fiscal support of Rs 4.5 lakh crore is required at the current juncture besides a quick release of Rs 2.5 lakh crore stuck in refunds and other government payments.

In a letter to Finance Minister Nirmala Sitharaman, Ficci President Sangita Reddy also made a case for the need to create a self-sufficiency fund for innovation, construction and manufacturing clusters to make use of the emerging opportunities in the wake of disruption in global supply chain.

The fund can be provided in tranches in the medium term, she said.

Seeking “immediate support”, Reddy said the problem being faced is largely that of liquidity, and immediate release of money stuck in refunds and other government payments to the tune of Rs 2.5 lakh crore will immensely help tide over the crisis.

“This may have already been provided for in the budget,” she said.

Further, additional fiscal support is required for vulnerable communities over and above the sum provided for in the Garib Kalyan Yojana announced earlier.

Fiscal support is also needed for MSMEs in order to help them get back on track. Besides, funds are needed for up-gradation of healthcare infrastructure to effectively deal with the current situation and for support to sectors like aviation and tourism that have been hit hard due to the lockdown.

“Additional fiscal support required at the current juncture for this purpose is about Rs 4.5 lakh crore,” the letter said.

The fiscal support sought includes “small amount” of Rs 10,000 crore towards proposed COVID-19 liquidity bridge required to give comfort to banks to restructure/ provide additional loans to large companies whose balance sheets have been impaired due to the virus outbreak, it added.

“Government may need to provide for about Rs 30,000-40,000 crore as a guarantee to banks over a 4-year period and in the current year, it can provide about one-fourth of that amount.

“This small amount will have a huge positive impact on these companies and their supply chain that includes several small and medium sized vendors, which otherwise may not survive the current crisis,” the chamber said.