Industry body CII has urged the Centre for urgent fiscal interventions to mitigate the economic costs of the lockdown, as the country's GDP is likely to range between (-) 0.9 per cent to 1.5 per cent in FY21.

"Given the extent of the damage to the economy from the disruption to business, the GDP growth in FY21 will likely be the lowest in many decades," highlighted CII Director General Chandrajit Banerjee.

At present, the lockdown which has been deemed necessary to curb the spread of Covid-19, has dealt a heavy blow to commerce, leading to a temporary closure of shopping malls, grounding of aircraft, shutting down of factories and deserted market places.

At the expiry of the second phase of lockdown on May 3, the control period would have lasted for 40 days.

"Given the situation, government intervention becomes critical not only to sustain the economy but also to prevent any humanitarian crisis," Banerjee said.

The industry body, in a paper titled 'A plan for economic recovery', has called on the Centre for urgent fiscal interventions which 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.

"CII 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% interest."

"In addition, the CII paper 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. The fund can be seeded by the Government contributing a corpus of Rs 10,000-20,000 crore, with further investments from banks and financial institutions such as LIC, PFC, EPF, NIIF, IIFCL et al. This will limit Government exposure while providing adequate liquidity to industry."

In terms of the MSMEs, the CII suggested a credit protection scheme whereby 75-80 per cent of the loan should be guaranteed by RBI.

"Without an increase in government spending in the near-term to drive an economic recovery, government revenue will dwindle, and high deficits will continue to be a problem in future," Banerjee said.