‘Indian businesses will also need some sort of support as well to help them deal with the havoc being wreaked by this pandemic’
As analysts weigh the economic impact of the 21-day lockdown and the 1.7 lakh crore package announced by the government on Thursday, an American business chamber said there is a need for a second round of measures to support businesses that are heavily impacted because of the COVID-19 pandemic.
“The government has tried to build a safety net today for India’s poorest and ensure them basic essentials at this time. I think Indian businesses will also need some sort of support as well to help them deal with the havoc being wreaked by this pandemic and we will wait for that second wave of measures to help industry,” said Nisha Biswal, President of the U.S. India Business Council (USIBC) in an interview to The Hindu, adding that the USIBC is in a “two-way” conversation with the government on steps to mitigate economic impact on businesses, particularly those that serve as a “services hub” for the world.
Impact on GDP
In the wake of the PM’s announcement of a 21-day shutdown, analytical firms have expressed concerns over its impact on India’s GDP. While brokerage firm Barclay’s brought down the 2020 GDP forecast from 4.5% to 2.5% in the calendar year, Nomura Research said its estimates suggest that 75% of the economy will shut down due to the measure, and that there would be a slide in the GDP as well.
While lauding PM Modi for taking the “important and necessary step” of the lockdown, the USIBC called for more uniform implementation of the exemptions for essential services during the lockdown, which are being disrupted at present. “India is a services hub for the world. Virtually every data processing company has a back office interest in India. Major banks, insurance companies, payment companies, process transactions not only in India but in other countries. That’s a real challenge…The government has put these in essential services, but the challenge is in the implementation,” Ms. Biswal added.
She further added that the countries need to work together and coordinate their responses. “We need consistency in approaches. This pandemic has two big impacts. Health and safety of the population is one priority, but it is also breaking up the interconnected economy that is keeping us afloat…stocking markets and manufacturing, and for the economy to play that role.”
In addition, India’s fight against the pandemic would also require companies to be able to import necessary chemicals for pharmaceuticals, bring in testing kits and ventilator parts. “Other countries need to be able to support the supply chain. Our letter was to identify some of those issues, and ways in which businesses in India can continue to service the needs,” she said.
In a letter to Prime Minister Narendra Modi on March 24, the USIBC also pitched for a task force to be set up in the government to coordinate with industry groups regarding the resources, essential goods and services and technical capabilities that they can provide in responding to COVID-19.
While Thursday’s announcement from the government was welcomed across various industry sectors, almost all sought similar sector-specific measures. “[The measures announced] will certainly entrust the faith of the vulnerable section of our society on the government and support them in dealing with the immediate concerns caused by COVID-19. We hope the government will also soon announce measures to support the automotive industry,” Rajan Wadhera, President, Society of Indian Automobile Manufacturers, said.
Likewise, the Confederation of Real Estate Developers’ Associations of India (CREDAI) said the Garib Kalyan Scheme was the need of the hour and the industry is “eagerly awaiting” the economic stimulus required for its revival.
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