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Last updated: 01 Aug, 2020  

India.Growth.9.Thmb.jpg Signs of nascent recovery need to be preserved: CII chief

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SME Times News Bureau | 01 Aug, 2020

Industry body CII Director General Chandrajit Banerjee viewed that it is necessary to preserve the nascent signs of economic recovery.

“In order to nurture the nascent signs of recovery, it is important to mitigate the uncertainties that are currently prevailing regarding the restrictions. Corporates are unable to plan beyond a horizon of a few weeks, affecting all operations”, said , Director General, CII.

“Although it is not possible to predict the course of the pandemic, a dashboard approach, triggering predictable responses based on the progression of infections, can reduce uncertainty and boost both consumer and industry confidence, which in turn will support demand and investment recovery”, added Banerjee.

Further, in order to ensure that the supply chains function seamlessly across state & district boundaries, including the containment zones, the latter should be limited to micro areas instead of a wider area.

On its part, the government has played a big role in driving the nascent recovery process by providing direct cash & food transfers to the rural & urban poor.

“In a significant confidence building measure, it is encouraging to note that the government dues to the industry have started coming in, which are likely to serve as a big and a direct liquidity booster to industry”, highlighted Mr Banerjee.

Other marquee schemes announced as a part of the Atmanirbhar stimulus package, such as the Rs 3 lakh crore collateral free loan for MSMEs & other businesses and the Rs 30,000 crore special liquidity scheme for NBFCs/HFCs/MFs have all taken off well, he further added.

It is pertinent to note that the recession staring at us in the current year is different from the previous recorded episodes of recession which were all triggered by a monsoon failure. This year, the agricultural sector has emerged as the beacon of hope for India's economy.

“Apart from normal monsoon & healthy sowing, a slew of government schemes in the form of livelihood interventions, such as expanding the MNREGA program and the Pradhan Mantri Garib Kalyan Rozgar Abhiyan, have supported the rural economy considerably. This has raised hopes of a rebooting of the economy by the rural sector”, commented Banerjee.

In addition, interventions by both the Central and State governments to ensure that the lockdowns do not affect the rabi harvest in March and April and the sowing of kharif crop in June, has led to expectations of a bumper agriculture production, he added. Consequently, NBFC sector lending in rural areas has also been as high as 80 per cent of the usual levels.

Apart from the rural sector, there are significant variations in the performance of different sectors. For example, some sectors that have done well, which include pharmaceuticals, FMCG and agriculture.

“Consumer facing industries, such as staple based FMCG, are likely to grow at 15-20 per cent in FY 21, primarily on account of an increase in in-house consumption of food and greater demand for sanitation and hygiene products”, Banerjee elucidated. In contrast, sectors such as aviation, hotels and commercial vehicles are still very stressed.

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