CII Chief Narendran Calls for Rs 3 Lakh Cr Fiscal Stimulus
Tata Steel boss urges government to increase job scheme quota, lower GST load, create room for tax relief
In his first press conference since taking charge, new CII President T V Narendran on Thursday said the Indian economy needs a Rs 3 lakh crore fiscal stimulus, including cash transfer to households through Jan Dhan accounts, to spur economic growth amid the pandemic. He also pitched for the appointment of a ‘Vaccine Czar’ for speedy vaccination coverage.
He also said the industry chamber expects GDP to grow at 9.5 per cent in 2021-22, as the strong growth in the second half of the fiscal year will be supported by robust external demand and large-scale coverage of vaccination, allowing resumption of economic activity.
Narendran, who is also the CEO and MD of Tata Steel, said suitable fiscal measures to alleviate stress of people impacted by the second wave are the need of the hour.
India’s is a consumption-led economy and the pandemic has impacted consumer demand, due to which the chamber called for measures such as cash transfers, as a number of actions are needed to deal with the demand shock, he told reporters.
“Fiscal stimulus of Rs 3 lakh crore is required... There is room for administering additional fiscal stimulus of up to Rs 3 lakh crore,” he said, adding RBI should expand its balance sheet to accommodate the increased stimulus, so that lending costs remain contained.
Measures suggested by CII include enhanced MNREGA allocations from the budgeted amount, short-term and focused GST cuts to boost demand, time-bound tax relief/interest subvention/stamp duty concession for home-buyers, LTC cash voucher scheme like last year, and extension of the Aatmanirbhar Bharat Rozgar Yojana till March 31, 2022.
Narendran also asked for ensuring timely payment to companies including MSMEs, accelerating public works programmes to ensure implementation of NIP, hiking ECLGS (Emergency Credit Line Guarantee Scheme) amount to Rs 5 lakh crore, reduction in excise duty on fuel and inclusion of ATF (aviation turbine fuel) and other fuel products under GST.
On vaccination, he said there should be minimum 71.2 lakh average daily jabs given from now till December 2021, to cover the entire adult population.
“Like in UK, a Vaccine Czar (or minister) should be empowered to undertake actions on a daily campaign to track domestic vaccine production and import supplies, equitable distribution of vaccines among states, to track progress on vaccine deployment and administration, and using a dashboard approach to share progress reports daily,” he said.
He said vaccination is a complex process as it needs coordination among different agencies, states, Centre, private and public sectors.
“Lot of players are involved in the process... So, a single contact person is required whom everyone can deal with,” he said.
To combat vaccine paranoia, Narendran suggested engaging film and sports personalities for awareness. He also called for incentivising people to get vaccinated — at the bottom of the pyramid, there should be cash/food/insurance incentive for those taking two doses and for the relatively better-off, the government could offer rebate on air/train travel within the country.
He also suggested a multi-pronged national oxygen development plan to create a robust oxygen ecosystem, and said the cumulative impact of the two waves on incomes and consumer sentiment, coupled with increase in household medical expenses in the second wave, is likely to affect consumer demand for some time.
“As the economy reopens post the second wave, a dual-pronged government strategy is required to boost consumption and support industry till demand is well-entrenched. CII estimates there is fiscal headroom of up to Rs 3 lakh crore,” he said.
Noting that a third wave is a possibility, he urged district administrations and the private sector partners to set up Covid care centres in rural areas.
Further, he said the government should implement the reform agenda envisaged in the budget, including dealing with bad assets, re-capitalise public sector banks to help them brace for the impact of higher NPAs and meet the credit need of industry as the economy reopens, and create a pandemic pool to cover risk of losses due to any future pandemics.