Stating that the Centre is financially strangulating the state, he said: "We are borrowing money due to the non-availability of Central allocation.”
Associated Chambers of Commerce and Industry of India (ASSOCHAM) on Wednesday urged the government for a $200-300 billion stimulus package to support the country’s economy from the underlining destruction post-lockdown period.
In a letter to the Finance Minister Nirmala Sitharaman, the industry body recommended that the Centre institute a stimulus package of at least $200-$300 billion to “thwart one of the deepest global recession expected in the world’s history”.
“The Chamber believes that in keeping up with most economies of the world to institute stimulus measures with 10 per cent of the Gross Domestic Product (GDP), the Indian economy would need a transfusion of over $200 billion with an ability to go up to $300 billion, over the next 12-18 months,” Secretary-General, Deepak Sood, said in a release.
He further said that out of the total corpus, $50-100 billion cash needs to be infused in the system in the next three months, to arrest the loss of jobs and compensate for the loss of income. “Such an infusion would help businesses and workers tide over the challenging situation.”
“It will be critical to ensure we proceed with three objectives i.e. immediate assistance to employees and labour through direct transfers and through employers, ensuring that companies have enough cash flow to survive the downturn, and finally stimulating demand and investment to revive the economy through fiscal and tax measures,” the industry body said in a statement.
Besides, the industry body requested the government to modify the FRBM Act to consider the debt to GDP ratio as a metric and not fiscal deficit.
“The government needs to set an example for other businesses with no bills being unpaid for more than 15 days,” Sood said, as per a statement.
“This will enormously help the credit cycle and will also bring down tender prices for everything.”
With the deflation that is expected in overall demand, the government should implement the National Infrastructure Plan with no loss of time, once the lockdown is completed.
Some of the other key recommendations to the Finance Ministry include a one-time loan restructuring to all corporates assuming a principal repayment start date moving upwards from March 2021, NCLT provisions to be held in abeyance for 6 months and a further reduction of repo-rate by another 100 bps by the Reserve Bank of India.
Last month, Sitharaman announced a 1.7 lakh crore stimulus package for the poor and daily wagers. The Reserve bank of India on the other hand, declared Rs 3.7 lakh crore liquidity stimulus measures, along with 75bps cut in repo rate and 100bps cut in cash reserve ratio.