Industry body PHD Chamber has asked the Centre to provide Rs 11 lakh crore stimulus package to mitigate the impact of the Covid-19 pandemic.

PHD Chamber of Commerce and Industry President D.K. Aggarwal has recommended the Centre to institute a fiscal stimulus of at least 5 per cent of the country's GDP which comes around Rs 11 lakh crore.

"The government has already provided a stimulus of Rs 2 lakh crore, therefore, our expectation is for the remaining Rs 9 lakh crore in terms of various relief measures and benefits to India's trade and industry," Aggarwal said, as per a statement.

"A significant stimulus in the tune of 5 per cent of GDP would help the economy to grow at around 5 per cent in the current financial year 2020-21."

Furthermore, the industry body recommended to the government to increase consumption expenditure in the economy and compromise with the fiscal deficit "even if it slips by 2 to 3 percentage points in the current financial year 2020-21".

"Businesses are facing hardship as inventories are piled up and working capital has been blocked, at this juncture, an automatic increase of 25 per cent in working capital without any procedure and application will reduce the stress; the increased WC should be allowed to be converted into a term-loan with a provision of 3 years repayment period," Aggarwal said.

"Such reform measures would go a long way to help trade and industry to operate in this extremely difficult time."

In its short term suggestions, PHD Chamber has suggested an immediate reduction in the lending rate by all the banks to percolate the full effect of recent 75 basis points cut in repo rate by the RBI.

"Also, we suggest to defer the EMIs of the term-loans for 6 months, special interest subvention @ 3 per cent p.a. in loans to MSMEs and other badly affected industries, abolish all fixed charges of all the utilities and defer utilities bills by 3 months," he said.

In the long-term suggestions, the industry body requested for a reduction of income tax of the proprietorship and LLPs firms to the level of 25 per cent for old and 15 per cent for new companies; reducing the customs duties on basic raw materials by at least 5 percentage points; and reducing the cost of capital with a further reduction of 100 basis points cut in the repo rate.

"We suggest rationalisation of GST rate structure by merging the 18 per cent tax slab with 12 per cent tax slab, and further recapitalization of the Public Sector Banks," said Aggarwal.

"Increase in government consumption expenditure and capacity building by the business firms would be crucial at this juncture to rejuvenate the economy to its potential growth trajectory of 7-8 per cent in the next few years."