ndia is under lockdown due to COVID19 since 24th March 2020 , with certain relaxations given under the various zone categories. Economic activity has been on standstill and the voice of bailout or stimulus package is growing from all quarters.
Even fear of job cuts and salary cuts have started emanating from various sectors. Manufacturing has been hit hard and so has been the demand. With uncertainty looming large, what next India should do to come out of this phase, sooner rather than later, as the voices coming from the IMF that the world has entered into deeper recession in comparison to 2008 financial crisis is not helping the cause either.
For me, it’s the correct time for PM Narendra Modi to step up his vision of ‘New India’ and the target of achieving $5 Trillion economy faster. India has garnered immense goodwill due to the giant steps it has taken under PM Modi. Even mass popularity of PM Modi as a world leader will act as a catalyst.
This is the time to push for ‘Make In India’ as many countries have raised concerns about China. Countries like Japan, Australia, Germany have been quite vocal in this regard and even US has stepped up it’s investigation against China.
India is strategically located and should use it’s geo political status to stop China from spreading its wings. It should align with US, Israel, Germany, Russia, France ,Japan and Australia in this regard. Stronger India will act as a deterrent to China and will ease out conditions in South East Asia.
On the economic front PM Modi should immediately setup a task force under his office to tap into this huge opportunity. He should ask External Affairs Minister Dr S Jaishankar and Minister of Commerce Piyush Goyal to take charge and talk directly with the companies and their respective governments. This would give an easing effect and security to investment company like the way India did a government to government agreement with France for ‘ Rafael’.
Here all details of clearances,land acquisition, providing infrastructure, funds, skilled and unskilled labour etc should be managed under the task force. Even the desirous companies should be collaborated with skill India program ,education and health sectors too. This will give them the kind of infrastructure and man power they want and also provide training at cost effective levels.
Tax sops should be given to such companies with a period of 5years. India has a huge potential of becoming the next manufacturing hub of the world.
As for the stimulus for MSME sectors and companies are concerned the following points would help in increasing liquidity & spending power
- Remove LTCG and taxation of dividends immediately.
- RBI should look forward into reducing the repo rate further.
- Provide colateral free loans of upto 50% of the last annual GST return to small traders /businesses/MSME Sectors with turn over of upto Rs 1.5 crores.
- Loans to be directly linked with repo rate which will make it cheap.
- Stress on specifics like health care/ defense /textiles and agriculture sector should be kept in mind.
- Moratorium period for small existing loans upto 25 Crores should be extended till 30th September,2020.
- Stress on government expenditure on infrastructure should be given .
- NBFCs should also be encouraged.
Once liquidity is maintained then slowly but surely things will start getting in shape. Government should not look into suggestions of increasing taxes by way of cess etc to burden the already bleeding economy. Even GST on mobile phones and consumer durables should be reduced to spur up the demand.
Even post COVID India should be projected as a travel destination to the world and all Indian embassies across the world should work to bring tourists to the country.
As time will pass , new challenges will emerge but the steps taken by PM Narendra Modi during this COVID pandemic will play an important role in shaping the future and open a whole bag of new opportunities for India.
Thoughts for this Article II visualized by author
Swayamsevak, BJP Karyakarta & a Nationalist
Follow him @gauaggbjp