New Delhi: India should take immediate steps to revive demand now and not necessarily wait for a Covid-19 vaccine, Assocham president Niranjan Hiranandani told ThePrint, while also advocating steps such as halving goods and services tax rates across all sectors.
In a video interview, Hiranandani, who also helms the real estate firm Hiranandani group, further pushed for a one-time loan restructuring, warning that the financial system could be headed towards a catastrophe without the loan recast.
“It is necessary to push demand now when opening up is taking place. Let us not wait for the vaccine,” he said. “We have to be far more proactive in our measures for demand creation.
“There should be a 50 per cent cut in GST across all sectors for six months to instigate demand,” he said, adding that the government could look at providing additional income tax relief to firms.
He further said that the government so far hasn’t announced measures to instigate demand, adding that the minute the government creates a trigger, there could be a sharp increase in spending by people.
He also pointed out the need for loan guarantees for credit to sectors like real estate, hotels, aviation, salons and tourism on the lines of the loan guarantee given to the micro, small and medium enterprises.
‘Reintroduction of lockdowns by states a disaster’
Hiranandani told ThePrint that the reintroduction of lockdown in states is turning out to be a disaster as businesses are unable to plan their supply chains as well as manage labour due to the uncertainties.
“Where they have opened up and locked in again, that is a disaster. It is difficult to get materials to come in and to get workers to come back if there is going to be a lockdown again,” he said adding that migrant labourers who had left for their villages are coming back gradually but not in huge numbers.
“It’s a trickle as compared to a tide,” he said.
Many states such as West Bengal, Karnataka, Madhya Pradesh and Uttar Pradesh had reimposed lockdowns in a few districts to halt the spread of Covid-19. But this forced manufacturing units to shut down.
Real estate sector has seen a price correction
Hiranandani said the real estate sector has been impacted by the pandemic with people delaying their house buying decisions due to the uncertainty. He, however, added that the sector has already seen price correction.
Hiranandani also said that the fund requirements of the real estate sector are much higher now compared to the pre-pandemic period. He pointed out that the Rs 25,000 crore stressed asset fund announced last year to finance incomplete housing projects may not be sufficient to meet the current requirements of the sector.
“The last mile funding required before the pandemic was Rs 25,000-Rs 50,000 crore. But this amount is now Rs 1.5 lakh crore,” he said.
The Special Window for Affordable and Mid-Income Housing or SWAMIH Investment Fund was announced last year to provide relief to housing projects but saw the first set of eligible projects get approval only recently. So far, around Rs 8,767 crore for 80 projects have been approved under this alternative investment fund.
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