Sector-specific steps must, says India Inc

Some sectors like aviation, hospitality, travel and tourism, and automobile have witnessed zero cash flow since the lockdown began.

The Rs 20-trillion package announced by the Narendra Modi government will help revive the economy, but chief executive officers (CEOs) of top Indian firms are disappointed at the lack of sector-specific measures.

The government should have announced steps that would have generated demand from consumers by giving direct cash doles to the poor and tax benefits to the middle class, said CEOs.

In a nationwide poll of 25 industry leaders on Sunday, 64 per cent said the package announced by Finance Minister Nirmala Sitharaman over the past five days will boost a sluggish economy, but 88 per cent of CEOs said they had been expecting sector-specific packages.

Some sectors like aviation, hospitality, travel and tourism, and automobile have witnessed zero cash flow since the lockdown began.

Several companies from these sectors are either laying off people or have announced steep salary cuts.

“Direct measures to generate demand such as goods and services tax reduction and direct in-pocket support for individuals/organisations starting from the bottom of the pyramid would have provided a much better boost to the economy,” said Rajiv Bajaj, managing director, Bajaj Auto.

“There is no doubting the fact that the packages contain prudent and sensible measures from the supply side of the equation.

"How demand will be created is still a big question mark,” Harsh Goenka, chairman of RPG Enterprises, said.

Forty-four per cent of CEOs surveyed said the package will improve the ease of doing business, but implementation on the ground is key.

“Overall, the package is strong, the intentions are right.

"The only thing we need to see is how it is executed and whether the intended benefits and the money reach the intended segments of businesses and the economy,” Nirmal Jain, chairman of IIFL Group, said.

Seventy-two per cent of CEOs surveyed said the government has handled the crisis well and an equal number said farmers’ income will improve due to changes in the Essential Services Act, which frees the market for farmers to sell without the intervention of mandis and middlemen.

But 40 per cent of them said the government has not done enough for the poor, while another 20 per cent were undecided.

“The government should have transferred an amount of Rs 5,000 for each family under the direct benefit transfer scheme.

"Many employees and workers have not got salaries in the last three months.

"To survive, they need cash in hand and to stimulate demand, they should cut down on taxes,” said Arvind Mediratta, CEO, Metro Cash & Carry.

CEOs are also concerned about the situation of migrant workers - many of who are walking hundreds of miles to reach their villages.

“The government could have taken better care of outstation labourers, who till mid-March were earning citizens and now are without any work or income,” said the head of a large infrastructure company.

Despite the flight of migrants from metro cities, 80 per cent of CEOs said they have enough workforce to run their operations.

The Rs 3-trillion package for micro, small and medium enterprises (MSMEs) was hailed by CEOs, as 68 per cent of the respondents said their suppliers or customers in the MSME sector would benefit from the measures.

Almost half the CEOs said they would invest more in the coming days as banks and the Reserve Bank of India encourage corporates to invest in the country.

The CEOs said the government’s resolve on privatisation and private participation is perhaps the biggest announcement.

It indicated the government can launch an international sovereign bond issue in the next three months, with maturity over next 50-100 years, at next to nil interest rates, and use the funds to build India’s social and physical infrastructure over the next five years.

Dev Chatterjee, Rajesh Bhayani, Raghavendra Kamath, Shally Seth Mohile, Hamsini Karthik, Shreepad S Aute, Amritha Pillay, Pavan Lall, Samreen Ahmad, and Peerzada Abrar contributed to the story