Govt, RBI holds a series of meetings on further relief to businesses

As businesses prepare for a calibrated unlocking, the government is likely to give a second tranche of financial relief soon to help combat the fallout of Covid-19 related lockdown.

Prime Minister Narendra Modi held a series of meetings with Home Minister Amit Shah, Finance Minister Nirmala Sitharaman, MSME Minister Nitin Gadkari, and officials of economic ministries to firm up the second stimulus package.

Later, Gadkari said the second package will be announced soon.

Separately, the Reserve Bank of India Governor Shaktikanta Das too held a meeting with the heads of banks and reviewed the implementation of various measures announced by it to reduce stress in the financial system.

The meeting, which happened in two separate sessions through video conference, saw the participation of managing directors and CEOs of major public and private sector banks, the RBI said in a statement after the meeting.

Demand for additional credit and a large financial package by businesses, which were on hold due to lockdown, is expected to appear aggressively when they are allowed to operate.

Businesses have been demanding fiscal stimulus including the reduction in goods and services tax, government guarantee to banks for lending to weaker businesses, the release of all government dues, and restructuring of the loans.

“Businesses across different sectors, be in hospitality, construction, logistics, manufacturing, and trade find themselves locked up in grave financial woes. The fixed costs, such as wages, electricity, rentals, communication are hard to meet even as the operational losses are inevitable. Such a dire state of affairs demands a large-sized fiscal stimulus even if it requires monetisation of fiscal deficit by direct lending by RBI to the government," industry body Assocham said.

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It said the 40-day lockdown has resulted in the massive economic disruption. The disruption has started causing livelihood concerns for millions of workforce - both in the formal and informal sectors

The prime minister also discussed the issues related to migrant workers, who have been the worst sufferers in the coronavirus crisis.

The industry body has also been suggesting to handle the issue carefully because once the workers are migrated to their native places, it would be difficult to recall them. Without the required manpower, it could be difficult to run the supply chain of essential goods.