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Government Should Frontload National Infra Pipeline Expenditure: PHDCCI

In an interaction Sanjay Aggarwal, President, PHDCCI says the with private investment not coming in the government should spend more on infrastructure projects which will give a multiplier effect to rejuvenate the aggregate demand in the economy. Aggarwal also talks about key initiatives taken by PHDCCI to Ashish Sinha.

Photo Credit :

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Excerpts:

What were the key initiatives undertaken during your leadership?

PHD Chamber of Commerce and Industry (PHDCCI) has been standing in complete solidarity with the government. It has extended full-fledged support in India’s fight against COVID-19. PHD Chamber has taken the lead in thought leadership especially on economic affairs and submitted more than 250 suggestions to the Government of India and the State Governments since the start of COVID-19 in March 2020 to mitigate the daunting impact of coronavirus on trade, industry and economy of which more than 200 suggestions have already been implemented by the Central government and State ?governments and remaining are under consideration.

Some key initiatives included contributions by Members - PHD Chamber Members donated Rs 528 crore to PM Cares Fund since April 2020. The members of the PHD Chamber have contributed generously to donate 10 imported oxygen generation plants to 10 Charitable Hospitals in the Northern Region each with a capacity to provide 24*7 oxygen for 50 to 100 hospital beds. PHD Chamber Member Organisations have supplied about 20% of medical oxygen demand of the country during the peak of 2nd wave of pandemic Covid 19. PHD Member Organisations have set up 250 bedded COVID care center at Dwarka, New Delhi and have distributed 200 oxygen concentrators to Covid care centers to needy families.

Distributing dry ration in slum areas and to the migrant workers was another highlight. PHDRDF (PHD Chamber Rural Development Foundation) has built more than 260 check dams in Rajasthan, Haryana, Punjab, Madhya Pradesh, Uttar Pradesh and Jharkhand which have a significant positive impact on the socio-economic development on the rural economy in these States.

Your view on the ongoing vaccination drive and its relevance to the overall economic revival?
As the second wave of Covid-19 has struck with a devastating impact throughout the country, with cases rising continuously, there is an urgent need for speedy vaccination of the people along with enhanced production possibilities of the vaccine at the domestic level and import from other countries to diminish the pandemic impact on people and economy. At least 75 per cent of the population of the country needed to be vaccinated with both doses of vaccination by December 2021 to do away with the uncertainty in the economy.

What has been the overall impact of lockdown on various sectors?
India's exports were hampered by supply chain disruptions, high raw material costs, and partial restrictions on economic operations. However, the export data for April and May 2021 are significantly inspiring as exports grew by more than 128% (average) in the first two months of FY 2021-22 though majorly driven by the low base effect. As the demand is re-emerging in the global economy on the back of declaration in corona cases in many economies, better export prospects are the best hope for achieving a reasonable economic growth trajectory. Exporters have benefited from the rupee's recent fall and also benefited from the various cost-cutting initiatives. Going ahead, exports can become a major growth vehicle to achieve the anticipated economic growth trajectory.

How has the MSME sector in particular been impacted by the lockdown?
The pandemic situation has impacted the MSMEs in four major ways. The first being the partial/complete lockdowns in many States and strict restrictions in various regions across the country. The second being the labour shortage, as the daily wage labours and office working segment fear the contraction of virus. The third is the skyrocketing price of commodities, such as steel, copper, aluminium, among others. The increase in costs of raw materials is affecting the MSMEs which are already struggling because of pandemic impact and squeezed working capital. Fourth is the depressed demand scenario as the second wave of COVID has spread to urban areas, metropolitan areas, small cities and rural areas. Further, as small enterprises do not have captive oxygen plants, the diversion of the oxygen from industrial units to hospitals would be challenging for the MSMEs and would lead to long-lasting damage to the revenues.

What, according to you, will be the key growth drivers once the un-lockdown process is completed?
To re-build for the high growth trajectory, the Government has to frontload the National Infra Pipeline expenditure as the private investors are not coming. The increased spending on infrastructure will give a multiplier effect to rejuvenate the aggregate demand in the economy. More and more direct transfer benefits need to be considered for the urban and rural poor under the various welfare schemes. India has always been an epitome in the tourism sector and has been one of the countries where the international tourist footfall has always been intact. Given that the global economy is opening, and people are looking for international travel, the enhanced expenditure on the tourism and hospitality sector would help increase its contribution in the economic growth, going ahead. The agriculture sector has been a low-hanging fruit and inherent strength of the Indian economy, which will continue to show positive growth on the back of government support to the farm sector. A substantial stimulus to create effective strides for futuristic growth trajectory and to diminish the daunting impact of the second wave of the pandemic coronavirus on trade and industry would be crucial to support the economic momentum in this extremely difficult time.