New Delhi: Former finance secretary Subhash Chandra Garg has said the 21-day Covid-19 lockdown will cost the GDP an estimated Rs 8 lakh crore, and called for a support package of at least Rs 2 lakh crore for small businesses.
In a blog post penned Tuesday, Garg said compensation packages for businesses affected by natural calamities was a practice in many countries.
“India has not, in the past, provided any compensation for loss suffered by the businesses on account of natural calamities. Many countries in the world are providing such support,” he added.
“The businesses are suffering this loss on account of a public health emergency declared by the government. It is not on account of their fault. The government should therefore support such suffering businesses,” Garg said, suggesting that the government could make a start with supporting small and self-employed businesses.
Garg, a 1983-batch IAS officer who took voluntary retirement last year, said small businesses would need working capital support to recommence their businesses, including funds for wages. Firms will also need investment support to ensure social distancing. Many would also require help with paying their liabilities like rent, servicing of interest etc, Garg said.
“While a loss assessment would be needed, this package should cover at least 25 per cent of the estimated loss or about Rs 2 lakh crore. If the phasing out of the lockdown continues to make some businesses inoperative, the fiscal package should build in a provision for them as well,” he said, adding that this would go a long way in putting Indian economy on its feet again.
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‘Lockdown should be phased out’
Prime Minister Narendra Modi announced a 21-day national lockdown, on 24 March to contain the spread of coronavirus. As of Wednesday morning, India had over 4,600 active cases of Covid-19, with Maharashtra, Tamil Nadu and Delhi accounting for the maximum number of cases.
According to Garg, the “economic lockdown” should be “phased-out by lifting it up from the vast rural areas and the cities which have no incidence of COVID-19 spread to undertake all economic activities”.
The lockdown, he said, had left around 10 crore workers of the mining, construction, manufacturing and services sectors jobless.
“From the business perspective, we should open up the least risky businesses like mining, construction, manufacturing, goods transport, warehousing, energy, oil and gas, personal transport, financial services, retail, long-distance railways and the like fully from 15th of April,” Garg said, implying that the risk of infection could be mitigated best in these sectors. “Opening of these sectors would bring about 2/3rd of workers back to the businesses,” he added.
Garg said a gradual and calibrated opening of the rest of the economy could be planned for over a period of one-and-a-half month thereafter. “We should have the entire economy functional by the end of May 2020,” he said.
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Hazaaron khwaishein aisi, ki har khwaish pe dum nikale. Where will the two trillion come from ? Recall the diligence with which gentleman wanted to empty the RBI’s vault. At the moment, the government – Centre plus states – should simply ensure that no Indian starves to death.