Vikram Kirloskar, president Confederation of Indian Industry (CII), has written to Prime Minister Narendra Modi amid the spread of COVID-19, requesting him to provide a fiscal stimulus of ₹2 lakh crore to needy citizens through Aadhaar-based direct benefit transfer (DBT).
He also suggested the RBI consider relaxing the NPA recognition norms from 90 days to 180 days till September 30, 2020 to provide relief to the industry facing payment issues as well as banks which were under pressure on classifying loans as NPAs.
“The government may consider a strong fiscal stimulus to the extent of ₹2 lakh crore, to be given to the needy citizens through Aadhar-based direct benefit transfer. An amount of ₹5,000 for each individual, especially the rural and urban poor and ₹10,000 for the most vulnerable section— the elderly, may be given,” he said.
These measures will help industry and economy manage the economic impact of COVID-19 and also help the banking sector tide over the stress of NPAs due to delayed debt servicing arising out of disruptions in business operations, the CII said.
To help ease the cost of capital, the CII said the government could consider removing long-term capital gains tax of 10% and fixing the total dividend distribution tax at 25%.
The CII requested that GST payments should be based on collection of bills rather than on raising of invoices, to avoid liquidity getting locked, in case there are delays in payments. On monetary measures, the CII suggested a 50 basis-point-cut each in cash reserve ratio and the repo rate, to ensure that banks had enough liquidity to lend to industry.