While there is no clear picture of whether or not the country-wide lockdown will get an extension in the coming week, one thing is for sure -- the country’s MSMEs desperately need an intravenous drip to survive this pandemic in the long run, and soon. This may be critical to save India from the worst of the upcoming economic crisis. In some good news, the country’s leaders seem to have been working double shifts and are committed to the idea of making India a global manufacturing hub. Finance Minister Nirmala Sitharaman earlier this week hinted that the ministry could soon introduce ‘implementable’ ideas in a similar direction, asking for relevant feedback and information from industry stakeholders. Whether these policies will provide the much needed boost to local businesses will be decided only when they are officially announced and implemented. In the interim period, like Prime Minister Narendra Modi said, “Jaan hai toh jahaan hai.” The Indian government’s focus may appear to be clearly on protecting lives over livelihoods. Our personal opinion on this notwithstanding, it is the responsibility of every Indian to stay put and respect the lockdown, for however long it may continue. One can only hope that this will suffice to help ensure minimum destruction to human life and the economy from the COVID-19 pandemic.
Trade Update
25TH APRIL
# 67
India is working at a hectic pace to woo MNCs planning to shift their production units from China in the post coronavirus world. The Finance Ministry has asked a select group of industry representatives to send “implementable” suggestions on an urgent basis to make the country a global manufacturing hub. “Please clearly specify the problem areas at the central level and the state level so that the same can be addressed. Suggestions are needed urgently and it would be better if sent by Monday (20th April, 2020),” Minister of State for Finance and Corporate Affairs Anurag Thakur’s office wrote to industry captains on 17th April.
Small industries in the country will face a shortage of raw material and labor as the graded lifting of the ongoing nationwide lockdown begins from 20th April amid a lack of clarity over whether entire supply chains will operate. Micro, small and medium enterprises (MSMEs) and the government will have to look for ‘practical solutions’ to what is perceived as the ‘right suggestions’ by the government. “For Original Equipment Manufacturers (OEMs), the entire supply chain has to be activated before production begins. So, shortage of raw material is a possible challenge that could crop up,” Sreekant Somany, Chair, CII MSME Council, told ET.
Indian industry has called for a doubling of credit growth and relief in wages and taxes to help revive manufacturing as it awaits an economic stimulus to cushion the blow from the COVID-19 pandemic. “Our thinking is that the economy requires credit to grow at 14-15% as compared to about 7-8% last year,” said Vikram Kirloskar, President of the Confederation of Indian Industry (CII). “To do this, banks will require extra capital support which can be leveraged 5-6 times to provide funds to industry. It is essential that firms be not allowed to go under due to this crisis situation and special measures are required for payment of wages and reconstruction of MSME (micro, small and medium enterprises) and stressed sectors.”
Prime Minister Narendra Modi extended the lockdown till 3rd May and stated a seven-point agenda early on the morning of 14th April, requesting people to maintain vigil and adhere to social distancing norms strictly. He also suggested that low-risk areas may be permitted to open up for certain specific activities from 20th April 2020 onward. PM Modi said, “Until 20th April, every town, every police station, every district, every state will be evaluated on how much the lockdown is being followed. Areas that succeed in this litmus test, those which will not be in the hot-spot category, and will have less likelihood to turn into a hot-spot may be allowed to open up select necessary activities from 20th April. However, permissions will be withdrawn immediately if lockdown rules are broken, and if there is a threat of the spread of coronavirus.”
The pandemic has thrown people and leaders into an unprecedented situation across the world. Such never-seen-before crises should propel people to co-create new ideas to combat the problem and conduct relations within and across the countries. But not Donald Trump, who has been consistently corny on issues like trade deficit, sanctions, and retaliation etc. The witty British Prime Minister Churchill had said, “A fanatic is one who does not change the subject, nor does he change his mind.”
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