The industry body CII has said that the government-industry task force should be set up to create a strategy to handle the situation and avoid industry closures, job losses, and price increases.
As the Indian economy started to show the green shoots of revival, China’s coronavirus made another dent on the country’s growth. However, now that the effect on the businesses due to the novel virus has started to show its signs, the slightly optimistic growth estimates should be reconsidered. “As global GDP estimates are being downgraded by multilateral institutions because of coronavirus, India, too, will have to evaluate the impact on its economy, especially with the country’s high dependence on Chinese imports,” said Chandrajit Banerjee, Director General, Confederation of Indian Industry (CII).
With the limited availability of goods from China, the demand in the Indian market has shot up, raising the prices to a new level. To replenish this demand, India can either import the goods from an alternative nation or can boost domestic production. However, since both the options are not cost-efficient, the CII has urged the government to provide some cushion in the form of loan, subsidy or interest subvention. There are many signs such as the significantly high expansion in manufacturing and services PMI, that showed that the economy was on the verge of revival, however, the new virus stir has brought back the fear of uncertainty.
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The industry body CII has said that the government-industry task force should be set up to create a strategy to handle the situation and avoid industry closures, job losses, and price increases. It also suggested that the government should roll back some of the duty increases it had announced in the budget to encourage domestic manufacturing.
Apart from imports, China plays an important role in importing goods for India. Including the exports of cotton, ores, organic chemicals, and frozen fish, the country accounts for nearly 5 per cent of India’s exports and thus the revenue of a significant number of companies is likely to be hit for which they will need support to diversify to the alternative channels.