Need to undertake measures to boost demand in the economy.
Commenting on the economic package and relief measure announced today, Mr Sanjiv Mehta, Senior Vice President, FICCI said, "We welcome the announcements to support the economy made by the Hon'ble Finance Minister. While some of the existing relief measures have been extended, the focus of the new measures is very well placed. The emphasis laid on the covid affected sectors in the latest relief package is laudable and was the need of the hour. In fact, this had been one of the key asks of FICCI in our submissions to the Government."
"The Rs 1.1 lakh crore credit guarantee scheme for COVID affected sectors with stress on the health sector is a great step forward. The focus on scaling up health infrastructure in areas other than the metropolitan cities should ensure timely availability of medical aid in the smaller cities. Moreover, the additional allocation of about Rs 23,220 crore for enhancing pediatric care centered facilities is equally important. These measures are timely, and their seamless implementation should help us prepare better to face the subsequent waves of the pandemic," added Mr Mehta.
Besides, the direct support offered to tourism and travel related stakeholders are praise worthy and was much needed. The sector has been severely hit in the first two waves of the pandemic and continues to face heat due to the uncertainty that prevails. The extension of working capital and personal loans with 100% guarantee to people in the tourism sector to discharge liabilities and restart businesses should offer good support to this sector.
"In addition, the enhancement of the very successful ECLGS scheme to Rs 4.5 lakh crore from Rs 3.0 lakh crore will ensure sufficient availability of liquidity on a continuous for businesses. We look forward to the sector wise details under the Scheme which the Hon'ble Minister said will be announced soon. Also, the announcement of the new credit guarantee scheme for MFIs is expected to give an impetus to fresh lending directly benefiting about 25 lakh people. This initiative is in the interest of the poor borrowers and will enhance the confidence level of banks to come forward and lend to smaller and mid-sized MFIs for on-lending to small and poor borrowers," said Mr Mehta.
The extension of the Atmanirbhar Rozgar Yojana until March 31, 2022 should help support additional hiring and this was also a suggestion made by FICCI to the Government.
Lastly, the external sector has been holding well, which has been reflected in the country's recent export performance. The additional support offered to ECGC for underwriting project exports and boosting export insurance cover are positive announcements.
FICCI would like to compliment the government for the slew of measures announced earlier today. While these would go a long way in alleviating the stress amongst the affected sectors including MSMEs, we see an equal need to undertake measures to boost demand in the economy. While the economic activity indicators have seen a swift turnaround, we need to sustain this trend, and this calls for supporting demand. FICCI has made several suggestions in this regard including the need to extend MGNREGA to urban areas, introduce direct cash transfers to the vulnerable sections of society, consider issuance of consumption vouchers for driving demand in the near term. There is a need to rebuild confidence amongst the people so that the consumption demand gains traction on a sustained basis. We are sure that some of these and other measures are under consideration by the government, and we look forward to more announcements in the times ahead.