Uday Kotak pitches for fiscal package to deal with Covid-19 impact
The government could consider increasing the quantum of the credit guarantee scheme for providing collateral-free loans to small businesses from Rs 3 lakh crore to Rs 5 lakh crore, he said
New Delhi: Amid the second wave of Covid-19 pandemic, CII President Uday Kotak on May 26 “strongly” recommended the government to consider another fiscal package to support the lower end of the society as well as small and medium businesses.
The government could consider increasing the quantum of the credit guarantee scheme for providing collateral-free loans to small businesses from Rs 3 lakh crore to Rs 5 lakh crore, he said in an interview.
Last year, the government had announced the Rs 3-lakh crore Emergency Credit Line Guarantee Scheme (ECLGS) as part of the Atmanirbhar Bharat package.
Kotak said the Covid 2.0 has turned out to be “very very damaging” and has shaken the country, particularly in April and May.
On the impact of the second wave of the pandemic on the GDP, Kotak said the initial feedback suggests that it was adversely impacting the economy and also the growth.
As against the initial expectations of 11% growth in the current fiscal on a lower base of the previous fiscal, Kotak said: “It would be fair to say that it is likely to be probably less… it is likely to be less than 10 per cent. We have to watch the situation.”
Amid this background, he said: “I would strongly recommend to the government to consider a fiscal package to support the lower end of the society and small and medium businesses. That can be through direct transfers, including through food and other measures on the one hand, and second schemes to support SMEs could be in the form of an additional package under the ECLGS scheme, which they did last year.”
In 2020, the Union government announced the “Atmanirbhar Bharat” package to perk up the economy and the overall stimulus was estimated to be worth around Rs 27.1 lakh crore, which was more than 13 per cent of the national GDP.
To mitigate the impact of the pandemic, the government and Reserve Bank had come out with a series of packages in a phased manner totalling around Rs 30 lakh crore, which is 15 per cent of the GDP.