According to Sood, the chamber believes that in keeping up with most economies of the world to institute stimulus measures with 10 percent of the Gross Domestic Product (GDP), the Indian economy would need a transfusion of over $200 billion with an ability to go up to $300 billion, over the next 12-18 months. He stated that out of the corpus, $50-100 billion cash needs to be infused in the system over the next three months, to arrest the loss of jobs and compensate for loss of income. Such an infusion would help businesses and workers tide over the challenging situation.
It will be critical to ensure we proceed with three objectives i.e. immediate assistance to employees and labour through direct transfers and through employers, ensuring that companies have enough cashflow to survive the downturn, and finally stimulating demand and investment to revive the economy through fiscal and tax measures.
The secretary-general states that the government also needs to modify the FRBM Act to consider the debt/GDP ratio as a metric and not fiscal deficit. “The government needs to set an example for other businesses with no bills being unpaid for more than 15 days. This will enormously help the credit cycle and will also bring down tender prices for everything,” He said adding that with the deflation that is expected in overall demand, the government should implement the National Infrastructure Plan with no loss of time, once the lockdown is completed.
Some of the key recommendations to the Finance Ministry includes, the one-time loan restructuring to all corporates assuming a principal repayment start date moving upwards from March 2021, NCLT provisions to be held in abeyance for 6 months and a further reduction of interest rate/repo-rate by another 100 bps by the Reserve Bank of India.
ASSOCHAM has also recommended the reduction in GST across the board by 50% for 3 months and 25% for the fiscal. “The final GST due should be payable in 6 quarterly installments starting October 2020 with no interest. Final income tax of FY 2019-2020 and advance tax FY 2020-2021 should be payable starting October 2020 in 6 quarterly installments with no interest,” Sood informed.
For the real estate sector, ASSOCHAM has recommended that Section 43CA and 23 (5) which deals with selling properties less than 10 percent of the circle rates and taxing of developers inventories for the notional rent be scrapped immediately. Also, the 5 percent GST on under-construction real-estate to be scrapped or to be given a full input tax credit.
Other recommendations include additional 25% increase to all standard loan accounts automatically. For the fiscal stimulus by government, RBI should directly subscribe to Govt. bonds so that the government doesn’t squeeze liquidity out of the market. For corporate bonds that are investment grade – RBI should give a line to the banks to invest in.