Covid-19 Fallout: Economic Impact & Measures
Financial Package Expected from Modi-Government This Week
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In line with major world governments announcing economic packages worth over $1.7 Trillion around Rs 130 lakh crore), the Modi-Government is also expected to announce an all-important financial package for India Inc. on or before March 24 to tackle the large-scale dip in economic activities due to growing pandemic of Coronavirus.
Prime Minister Narendra Modi has already stated that the finance minister Nirmala Sitharaman is heading the committee that is talking to all businesses to understand their respective needs and suggestions on how to deal with the situation economically.
The challenge, however, is the anticipated shortfall in tax collection expected till March 31, 2020, due to the economic disruption brought about by the spread of Coronavirus. The government, as per its estimates made in the General Budget, expects over Rs 4 lakh crore in tax collections by the end-March, which now, may fall-short. With lockdown announced by several State governments till March 31 and complete shutdown of Indian Railways, the economic fallout is being ascertained as you read this.
India Inc. expects the financial-package or economic relief in line with what has been announced by many developed countries. Many countries, including US, UK, Canada, France, and others have already announced financial support, bail-out packages, tax-breaks, and financial incentives to tackle the economic impact of the rapid spread of Coronavirus in each of their respective countries.
The USA has already committed injecting $1 Trillion (Rs 75 lakh crore) to help out companies operating airlines, hotels, casinos, small-scale industries and others. Between the UK, Canada, France and others, another $70-80 billion packages have been announced in last 3-4 days.
United Kingdom says it will infuse $385 billion as 'rescue package'. Canada’s aid package announced so far exceeds $57 billion including around $19 billion in direct support benefits and $38 billion to help business liquidity through tax deferrals. France is injecting over $48 billion as stimulus package including reduced social security package, unemployment benefits, and creating funds to support the self-employed and small business establishments.
Asian country like Indonesia is infusing over $9 billion packages to bail out aviation, hospitality and real estate industries. This package also incorporates the corporate tax cuts for select manufacturing sectors. Many countries have deferred tax-payment dates by 3-6 months.
On Sunday, March 22, the day of Janta Curfew, decisions were taken by various government departments, both at the Central and State-levels on 'Lockdown'. As decided, all passenger trains, Metro, Inter-State bus services have been suspended till March 31 including a complete lockdown in 75 districts. The decisions were taken at a high-level meeting of Chief Secretaries of all states. The districts where lockdown was announced are from states that include Uttar Pradesh, Maharashtra, Punjab, Karnataka, Tamil Nadu and Kerala. On Monday, March 23, the State governments will issue orders allowing only essential services to operate in these 75 districts with confirmed COVID-19 cases or casualties. The officials stressed that these steps were vital to ending the chain of transmission. The state governments may expand the list depending on their assessment of the situation.
Maruti Suzuki, country's largest carmaker says it has halted operations at its Haryana facilities in order to prevent the spread of Covid-19, and in line with the direction of the government. The Haryana State government has already announced lockdown across 7-districts including Gurgaon, Sohna, Manesar among others. Delhi is in lockdown, so are the adjoining districts of Gautam Budh Nagar (covering NOIDA and Greater NOIDA), as ordered by the Uttar Pradesh Chief Minister Yogi Adityanath on March 22. Tata Motors may soon follow and bring all production to a halt in its plant in Pune.
While we await the economic package from the Central government, some State Governments have announced measures to give relief to the poor and those living on daily wages. Uttar Pradesh will be spending Rs 420 crore in order to provide a relief of Rs 1,000 per month to each of the daily wage workers (over 36 lakh in numbers). Additionally, the State government will also provide 20 Kg wheat, 15 kg rice to over 1.65 crore poor people. UP CM Adityanath has also said that his government would not let "anyone face any problems" arising out of the adverse impact of the pandemic.
Punjab Chief Minister Captain Amarinder Singh has also announced an immediate relief of Rs 3,000 each for all registered construction workers in the state in a bid to provide relief to them in the wake of COVID-19 outbreak. The money would be transferred to the bank accounts of workers by March 23. Punjab government will be spending around Rs 100 crore for this initiative. The Delhi government will be paying the salaried of School teachers apart from several other measures being taken. Karnataka government is also expected to announce its own financial package for the workers and the daily wage earners on or before March 24.
Andhra Pradesh CM also announced free ration to poor and Rs 1000 per family in view of the lockdown.