Staff Reporter / NEW DELHI
Industrial leaders and organisations have welcomed the announcement made by finance minister Nirmala Sitharaman to provide relief to different sectors affected by the COVID-19 pandemic, saying these measures are timely, and their seamless implementation should help us prepare better to face the subsequent waves of the pandemic
Mrs Sitharaman announced a slew of package on Monday June 28 to provide relief to different sectors affected by the 2nd wave of COVID-19 pandemic.
The measures announced was also aimed to prepare the health systems for emergency response and provide impetus for growth and employment.
Welcoming the economic package President CII Mr TV Narendran said : “We are heartened by the targeted interventions announced by the government, with a special focus on health and tourism. The liquidity boosting measures to keep the enterprises afloat in the aftermath of COVID 2.0 in the form of extending loan guarantees to the healthcare, tourism sectors & small borrowers, in addition to increasing the scope of ECLGS by Rs 1.5 lakh crore are very welcome steps ”.
Mr Narendran added that the ECLGS Scheme has been a very successful intervention with the sanctioned amount standing at Rs 2.69 lakh crores so far. The extension of its scope and coverage are expected to provide significant support to the cash flow of the stressed sectors.
“Tourism sector has been one of the most impacted sectors, with the second wave having exacerbated its duress. With a significant contribution to both GDP and employment, the economic relief package announced for the tourism sector will usher in the much-needed liquidity and help revive this employment intensive sector”, said Mr Narendran.
The financial support in the form of working capital loans with 100% guarantee to more than 11,000 registered tourist guides and travel and tourism stakeholders will help save livelihoods, revive the sector and mitigate further closures and also create new job opportunities. Free Visas for the first 5 lakh tourists will provide the necessary welcome relief to foreign tourists coming into India and would help in promoting tourism after a massive disruption faced by this sector.
“We welcome the announcements to support the economy made by the Finance Minister. While some of the existing relief measures have been extended, the focus of the new measures is very well placed. The emphasis laid on the covid affected sectors in the latest relief package is laudable and was the need of the hour”, said Mr Sanjiv Mehta, Senior Vice President, FICCI.
Adding that the Rs 1.1 lakh crore credit guarantee scheme for COVID affected sectors with stress on the health sector is a great step forward. “The focus on scaling up health infrastructure in areas other than the metropolitan cities should ensure timely availability of medical aid in the smaller cities. Moreover, the additional allocation of about Rs 23,220 crore for enhancing pediatric care centered facilities is equally important. These measures are timely, and their seamless implementation should help us prepare better to face the subsequent waves of the pandemic,” added Mr Mehta.
He said that, the direct support offered to tourism and travel related stakeholders is praiseworthy and was much needed. The sector has been severely hit in the first two waves of the pandemic and continues to face heat due to the uncertainty that prevails. The extension of working capital and personal loans with 100% guarantee to people in the tourism sector to discharge liabilities and restart businesses should offer good support to this sector.
Village Financial Services MD & CEO Kuldip Maity said, “We welcome the initiative announced by the finance minister to facilitate loans to bottom of the pyramid borrowers through microfinance institutions.
Village Financial Services MD & CEO Kuldip Maity said, “We welcome the initiative announced by the finance minister to facilitate loans to bottom of the pyramid borrowers through microfinance institutions. The move will benefit both the NBFC-MFIs and their borrowers in these tough times as the disbursements by MFIs have taken a hit because of cash flow issues, which eventually left borrowers in distress as they were unable to carry on their income generating activities due to lack of funds. .”
However some experts have expressed doubt that new loan guarantees will boost economic growth. They said that the new loan guarantees, may provide some temporary relief but would not be sufficient to boost economic growth.
“Finance Minister’s new deal as Covid-19 relief is based on three prongs: More guarantees by the government to improve flow of credit to vulnerable and important sectors; direct action when it comes to health; and support for the poor and farming community. These measures are timely and will help alleviate the hardships of the concerned sectors. But these again are supply side measures and not on the demand side. A large part of the package will work only in the medium-term” writes Madan Sabnavis chief economist at CARE Ratings.
Aditi Nayar, chief economist at ICRA, the Indian arm of rating agency Moody’s, said the new measures would have an impact of around 0.6 trillion rupees on government finances, and their success would hinge on offtake, or actual spending.
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