COVID-19: Govt may come up with more sector-specific relief

The stimulus to COVID-19-ravaged industries may not be over yet. The government may come up with more sector-specific relief in the wake of India’s service industries -- aviation, tourism, travel and hospitality -- which make up more than half of India’s GDP crying hoarse over too little benefits to them from the nearly Rs 21 lakh crore package.

The next stimulus could be in the form of some interest and collateral free loans for covering immediate operational costs so that these industries are able to begin work.

The government is also expected to extend some relief to retail traders taking recourse to jandhan transfers but any further relief could come only after the Reserve Bank of India delivers its monetary policy early next month.

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“The government has not said it is done with it is stimulus measures. We have been assessing the damage on a continuous basis. The government has been talking to each industry separately to know what kind of help they require,” a government official told DH.

Indian tourism, travel and hospitality together support 10-12% of the country’s employment but these will probably not open till the travel restrictions are lifted fully. Even after they open up, they are expected to operate with less than half of their capacities, making most of the tourism businesses unviable on a cash operating basis, the industry has complained.

Immediately after the government concluded it five-tranche stimulus, independent economists, rating agencies and brokerages commented saying the steps announced were more medium term in nature and had little for the vulnerable section.

Goldman Sachs immediately cut the country’s September quarter GDP growth to (-) 45% and brokerage firm Bernstein asked Finance Minister Nirmala Sitharaan: "Is the aim to revive GDP, or to reach the 20,000,000,000,000 number?"

Meanwhile, the focus has now shifted to RBI for more interest rate cuts not only from the industry but also from the government, which has begun to raise pitch for a deeper cut as it wants a whopping Rs 12 lakh crore worth of market borrowing programme to go on smoothly. The RBI’s move will take pressure off G-Sec yields, which hover around 6.10% and need to be brought down.

The RBI had cut the repo rate by 75 basis points to 4.4% in March.