NEW DELHI: The government must extend an immediate stimulus of around Rs. 15 lakh crore, which accounts to 7.5% of India’s GDP, to help provide relief to the industry, especially small businesses, the Confederation of Indian Industry (CII) has said.

By the time the third phase of the lockdown ends on May 17, the Indian industry would have lost two months’ output, the CII said, adding that Covid-19 has “crippled” the economy. “The CII recommends the government to announce an immediate stimulus package of at Rs. 15 lakh crore, which translates into 7.5% of GDP,” CII president Vikram Kirloskar said in a statement on Friday.

“With economic activities being restricted for over 50 days now, the negative impact on the economy is expected to be even more significant than what we had earlier anticipated,” he said.

To support the estimated 63 million MSMEs, which have been battered by the pandemic, the industry body has suggested a credit protection scheme for MSMEs, whereby 60-70% of the loan should be guaranteed by the government, that is, if the borrower defaults, the government should repay the bank up to the amount it has guaranteed, so the risk to the lender is limited. This will encourage the banks to lend to the ailing sector so that their working capital needs are met.

The broad elements of the stimulus 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 should be ensured that the migrant labourers are kept within the purview of the proposed cash transfers, the industry body said.

In order to provide enterprises immediate support to pay salaries to their workers and avoid any job losses, the CII suggested a provision of Rs. 2 lakh crore for 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% interest.

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