With businesses closed during the lockdown, the government will contribute employees as well as employer''s contribution to the provident fund for the next three months of companies with up to 100 employees with 90 per cent earning not more than Rs 15,000. The contribution will be a total of 24 per cent of eligible wages.
India Inc welcomed the Rs 1.70 lakh crore relief package for the poor and most vulnerable sections and said now it is high time that the government take measures to ease pain of distressed businesses hit by the coronavirus outbreak.
The Centre’s economic package involves free foodgrains and cooking gas to the poor for the next three months, one-time doles to women and poor senior citizens, higher wages to workers and measures to boost liquidity of employees as the Centre looks to contain the impact of unprecedented nationwide lockdown.
“The entire package is expected to alleviate the difficulties currently being faced by the poor and the distressed. However, the government could be more aggressive in its spending with an overall fiscal stimulus at 2.5-3 per cent of GDP if the disruptions continue for the next 3 months,” CII Director General Chandrajit Banerjee said.
The industry chamber expects some measures for addressing the needs of distressed businesses, especially in the small and medium scale sector, which have very little cash flows in the current circumstances. “The government needs to excuse them from making statutory payments such as utility and GST payments for the next three months. Special support is also needed for severely affected sectors such as tourism and hospitality,” Banerjee said.
Ficci President Sangita Reddy said the disruptions caused by covid-19 and its spread are massive and dislocations are seen across sectors. “Ficci looks forward to the next set of announcements by the Finance Minister aimed at the corporate sector that is also essential to keep the economic fabric of the country intact and we are hopeful that same will be announced in quick succession, ” she added.
Assocham Secretary General Deepak Sood said, the industry expects similar measures for the businesses and trade in sync with the RBI with the foremost urgency for across-the-board forebearances on bank loans. “The Rs 1.70 lakh crore Pradhan Mantri Garib Kalyan (Economic Package) will certainly provide relief to the people who have been impacted by the economic disruption due to the Coronavirus outbreak. This is certainly a step in the right direction and will provide emergency relief to those impacted by the lockdown,” said Rumki Majumdar, Economist, Deloitte India.
According to Partha Chatterjee, Head of the Economics Department, Shiv Nadar University, the government should think about more steps to help the organised sector, and in turn encourage formalization of the economy. “They can waive off interest rates on loans and provide bridge loans, particularly for operational cost since in the current situation they may be shut off and have no inflows of revenues,” he said.
With businesses closed during the lockdown, the government will contribute employees as well as employer”s contribution to the provident fund for the next three months of companies with up to 100 employees with 90 per cent earning not more than Rs 15,000. The contribution will be a total of 24 per cent of eligible wages.
“For individuals who are members of the provident fund, the relaxation on withdrawal conditions under the EPF Scheme will help them tide over short-term cash crunch. However, the withdrawal process will need to be quickly streamlined in order for members to be able to withdraw their provident fund accumulation in an expeditious manner, ” Richa Mohanty Rao, Partner, Cyril Amarchand Mangaldas said.