The task force must draw upon experts across disciplines to help India ride out this unprecedented and extraordinary crisis.
The economic task force to deal with Covid-19 promptly convened its first meeting after the Prime Minister announced its setting up on Friday evening. However, the meeting did not have much to offer. It was clear even a month ago that Covid-19 would impair the Indian economy, with its dependence on Chinese intermediates. Now, with Europe becoming the epicentre of the coronavirus ( casualties have overshot those in China) and the US battling an escalation of cases, the Indian economy faces the scary prospect of grinding to a halt, with goods and services exports, livelihoods and businesses being disrupted for an indefinite period. While UK, Canada, Italy, France and the US are rolling out ‘doing all it takes’ steps to prevent a collapse of incomes, the task force must pick up some cues and respond post-haste to what is certainly an economic emergency. States such as Kerala and Delhi have taken the lead. Kerala has announced soft loans to weak sections, enhanced social security pensions, free rations with double the entitlement and an extended deadline for tax recovery on motor vehicles and buildings. Delhi too has announced free rations with a higher entitlement and higher pensions for widows, the elderly and differently-abled. The Centre should transfer cash to the 30 crore Jan Dhan account-holders, enhance entitlements under PDS as a safeguard against food inflation and enhance the paltry old age pensions. The beneficiaries are clearly identified in these cases (67 per cent of the population in the case of PDS), reducing implementation hassles; hence, biometric identification can be dispensed with for now. While considering forbearance on NPA recoveries (extending the timeline to six months), the Centre and RBI should take a lenient view on concessions extended by healthy State cooperative banks. This is a moment for ‘cooperative federalism’, for which wider consultations should be held, including a special meeting of the GST Council. The Council can defer deadlines for filing returns and matching invoices.
Besides welfare steps, sectors that have been badly hit such as aviation, poultry, travel and hospitality may require special attention, while the investment-based definition of MSMEs can be relaxed to extend the recently announced credit initiatives to a wider set of units, benefiting exporters in particular. Taking a cue from UK, the Centre can announce tax breaks to companies which retain workers and pay their salaries. Rather than merely appeal to corporates to enhance their CSR activities, an incentive or two would help for increasing such work in the area of health services. Some companies have announced concessions on products that are useful today, such as sanitisers and disinfectants, setting an example.
These are extraordinary times; a business-as-usual adherence to fiscal deficit targets is not workable. The task force must draw upon experts across disciplines to help India ride out this unprecedented and extraordinary crisis.