Implementation of stimulus key

With Covid-19, the pandemic caused by novel strain of coronavirus, ravaging the world and world's economy, industrial and services sectors in India are facing biggest challenge in the recent history.

Though key healthcare sector and saving human lives is the first priority for any government, supporting economy and businesses is also essential as a stronger economy and equally stronger corporate sector will be imperative for the country to recover faster from the debilitating impact of the novel coronavirus.

The 21-day national lockdown that the Modi government announced on March 24 crippled the economy. The country's economic activities came to a standstill.

In this context, the Central government should announce massive stimulus packages to put the sputtering economy on track. It is pertinent to recall here that Finance Minister Nirmala Sitharaman announced Rs 1.7 lakh crore relief package on March 26 to help the country's poor tide over financial distress caused by the unprecedented health crisis and its associated lockdown.

A slew of measures announced as part of this package has been targeted at the poor, women, migrant workers, farmers, the disabled, etc. These steps will obviously put more money into the hands of people, leading to increase in consumption levels at a time when the country's economy is on the brink of collapse.

Further, the following day on March 27, the Reserve Bank of India came out with its own measures to improve liquidity in the system and make loans cheaper. For that to happen, the apex bank reduced key repo rate by a whopping 75 basis points to 4.4 per cent.

It also announced three-month moratorium on term loans including business loans and housing loans, deferment of interest payments on working capital. Many including business owners expected these big steps to come to their rescue during these testing times.

But that did not happen in reality as banks put numerous conditions for availing moratorium on loans and for deferment of interest payments on working capital loans. Some banks even went ahead and deducted EMIs, interest payments on business loans, etc., from customers' account in April first week.

So, many borrowers failed to benefit from the sops announced by the RBI. As the apex bank has not announced any financial package and was not clear on who will have to bear the financial costs of the three-month moratorium and deferments, many banks have put conditions for availing the benefits.

Against this backdrop, the Central government should take steps to see that all the economic stimulus measures announced by it and RBI to tackle Covid-19, are implemented without strings attached.

It should realise that mere announcements serve no purpose. On Monday, Union Finance Ministry officials indicated that the Centre would soon come out with a second relief package to support the sectors hit hard by the 21-day lockdown.

MSMEs, hospitality and transport sectors are in distress. So are other sectors. It is good that the Centre is working on a new economic stimulus package.

But the implementation of the package is important, not the announcement. The Centre should take adequate measures on this front. Otherwise, the economy will take a bit hit and land in ICU.