Bold action needed to revive economy, says industry

Following a 23.9% contraction in GDP in the first quarter of FY21, industry has urged “bold and decisive” action from the government to stimulate demand for India to return to a positive growth trajectory, the findings of a survey show.

Conducted in August and covering 166 firms, the survey by FICCI and Dhruva Advisors said weak demand continued to remain the key bottleneck as almost 68% have reported this as their biggest challenge; 41% have said sales in August were less than 50% from a year earlier. Another 21%, reported sales between 50%-75% of the August 2019 figures.

“Reviving the economy requires sustained effort, especially when, in the first quarter, our GDP suffered a major blow,” said Sangita Reddy, president, FICCI.

“In the absence of a major fiscal push on the demand side, we could end up being stuck in a quagmire of a low demand and low-income cycle. If we have to return to the positive growth trajectory, the time for bold and decisive action is now.”

The sharp GDP contraction was a matter of great concern and clearly underlined the need for a major stimulus to energise and strengthen demand in the economy, said FICCI. In June, only 25% of firms had reported that unlocking of the economy had a positive impact on their order books, while in August, 44% reported an improvement post opening up of the economy.

Survey participants also suggested measures on supporting demand, including additional cash transfers to migrant workers, the poor and farmers; temporary cut in GST rates; increase in government procurement; front-ending infrastructure projects and part funding of wages as had been done in other nations to ensure employment was sustained.

Additionally, the Central government must come out with a uniform policy for entry of tourists across different States as movement of people will oil the growth of the domestic/regional economies. “When asked for their views on the localised lockdowns across states, 84% of the surveyed companies reported that there was a ‘moderate to high impact’ on their operations on account of localised lockdowns.”

Further, the respondents said that the government-backed Emergency Credit Line Guarantee Scheme (ECLGS) has been a key driver of credit growth during this challenging period. About 40% of the surveyed companies said it was effective and helped them deal with hardships due to COVID-19, as against nearly 20% companies in June 2020.

Besides, 67% of respondents said the one-time loan restructuring scheme announced by the Reserve Bank of India will have a beneficial impact on businesses.

You have reached your limit for free articles this month.

To get full access, please subscribe.

Already have an account ? Sign in

Show Less Plan

Subscription Benefits Include

Today’s Paper

Find mobile-friendly version of articles from the day’s newspaper in one easy-to-read list.

Faster pages

Move smoothly between articles as our pages load instantly.

Unlimited Access

Enjoy reading as many articles as you wish without any limitations.


A one-stop-shop for seeing the latest updates, and managing your preferences.

Personalised recommendations

A select list of articles that match your interests and tastes.


We brief you on the latest and most important developments, three times a day.

*Our Digital Subscription plans do not currently include the e-paper ,crossword, iPhone, iPad mobile applications and print. Our plans enhance your reading experience.


Source link

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.