The lockdown in India has entered the 11th day with all the businesses shut except for essentials. The lockdown has already resulted in daily wagers losing their jobs and going back to their hometown. Major corporates from across industries have announced pay cuts of varying degrees to remain financially viable amidst this lockdown due to the Covid-19 outbreak. But one very important thing missing out of the picture is a fiscal package. Although the government has already announced a relief package of Rs 1.7 lakh crore which amounted to only 0.9% of GDP under Pradhan Mantri Garib Kalyan (PMGK) the corporate sector is yet to receive any fiscal support.
Govt assessing the situation
As per a report by Hindustan Times, the ministry of finance is monitoring the situation and a will respond if any need is required. India's already struggling economy has been further dragged down by the lockdown. Global consulting groups have estimated the worse performance of the Indian economy in the coming days as it is expected to clock its worst growth in recent times. Fitch Ratings has estimated it to grow by 2% that is the slowest in 30 years. In fact Nomura Global Market Research estimates it to contract by 0.5% for the calendar year 2020.
As the government plays the wait and watch game, there is a brewing sense of frustration among India Inc. One of the executives at a large Mumbai based fund said, "The US has announced a package that is 10% of its GDP; the UK 15%; what have we done?" For instance, the US has given cheques to the financially struggling individuals but it has also announced financial assistance to businesses.
Further, in the absence of larger incentives for employers to not lay off people, it will be forced to fire its employees. France has taken a series of measures to support its businesses. The country has deferred tax payments and payroll charges that the companies pay for the month of March. There have been plans for a larger bailout.