Covid 19 outbreak: Government to ease MSME pain, 50% wage relief for workers
Parul March 23, 2020
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It is reported that the government’s immediate agenda is centred on providing relief to sectors hit hard by the novel coronavirus, Covid-19 outbreak, with suggestions for a 3% interest subvention for the MSME sector as well as at least 50% wage support for workers in airlines, hotels, tourism and other sectors. In fact, as per reports, suggestions also include expanding the fiscal deficit target and relying on the Reserve Bank of India (RBI) to stagger loan re-payments for specific sectors, which have borne the brunt of the impact of the virus outbreak.
It is also reported that there is a view that the government should opt for the direct benefit transfer route (DBT) to provide urgent relief to those, who may have lost their livelihood or may get affected if the present crisis lasts longer. Many reports claim, “if not 100% wage support, at least 50% can be provided for some time.”
In fact, nearly 38 crore Jan Dhan bank accounts can be used for DBT to provide immediate relief. Meanwhile, the government has already breached the fiscal deficit target in the current financial year that ends in March and has promised to return to the path of fiscal consolidation.
According to reports, the preliminary estimates have shown that the total fiscal stimulus package could be about 4% of GDP, almost the similar level that was unveiled during the 2008 financial crisis to provide a boost to the economy. The government resorted to the Fiscal Responsibility and Budget Management Act (FRBM) to take a 0.5% deviation in the fiscal deficit for 2019-20 to provide a booster to counter the slowdown. The deficit has been pegged to 3.8% in 2019-20 and the Centre hopes to rein in at 3.5% of GDP in 2020-21.
Finance minister, Nirmala Sitharaman, heading the Covid-19 task force is likely to hold extensive dialogue with various stakeholders, industry sectors and ministries and plan out detailed steps to counter the economic challenges posed by the virus outbreak.