The Confederation of Indian Industry (CII) in a paper - A plan for economic recovery - has said that India's GDP is likely to range between a decline of 0.9 percent and a growth of 1.5 percent in the current financial year (FY21), with the economy undergoing a turbulent phase caused by the coronavirus-induced lockdown. It laid out its growth expectation under three scenarios and suggested urgent fiscal interventions. It said in the baseline scenario, the Gross Domestic Product (GDP) is expected to grow at just 0.6 percent on an annual basis as economic activity is expected to remain constrained due to continuing restrictions on the free movement of goods and people beyond the lockdown period.
This will lead to disruption in supply chains, slow pick-up in investment activity, labour shortages in the short-run and muted consumption demand on account of reduced household incomes. In the optimistic scenario, which envisages a faster pick-up post the lockdown period, the GDP is forecast to register a growth of 1.5 percent in the best case. In case of a more prolonged outbreak, where the restrictions in existing hot-spot regions get extended, while new regions are identified as hot-spots leading to intermittent stop and start in economic activity, GDP is likely to decline by -0.9 percent.
Besides, the urgent fiscal interventions, as suggested by CII should include cash transfers amounting to Rs 2 lakh crore to JAM account holders, in addition to the Rs 1.7 lakh stimulus already announced. It has also suggested additional working capital limits to be provided by banks, equivalent to April-June wage bill of the borrowers, backed by a government guarantee, at 4-5 percent interest. In addition, It has suggested the creation of a fund or SPV with a corpus of Rs 1.5 lakh crore which will subscribe to NCDs/Bonds of corporates rated A and above.
