GDP to pick up in Q2 FY21 if industry overcomes lockdown impact soon

New Delhi [India], May 4 (ANI): India's economic growth is likely to pick up during second half of the current fiscal year (October to March) as the combined impact of COVID-19 crisis and subsequent lockdown is likely to linger in the first two quarters, CII President Vikram Kirloskar said on Monday.
He said cash liquidity has dried up for several small and medium enterprises which raises the prospect of huge job losses in coming months.
Automobile sales have been zero in April. If the production starts in June, there could be a 30 to 35 per cent decline being reflected in the second quarter (July to September) as consumer demand may pick up in coming weeks, said Kirloskar.
"The dealerships need to open up. Our raw material comes from suppliers which are located in red zones. Supply chains need to be streamlined," he told ANI. However, agriculture and pharmaceuticals seem to be a good bet in these difficult times.
Kirloskar called for a stimulus package totalling 3 per cent of the GDP to save small and medium enterprises, which form the backbone of Indian economy and provide employment to millions of workers.
Besides, some sectors like hotels and airlines have been badly hit due to the COVID-19 crisis and lockdowns. They also need to be provided fiscal benefits.
For other sectors, Kirloskar suggested additional working capital limits be provided by banks equivalent to April to June wage bill of the borrowers backed by a government guarantee at four to five per cent interest. In addition, the Goods and Services Tax (GST) structure needs to be simplified.
On the issue of migrant workers, the CII President said state governments must rethink their investment policies to encourage industry players so that they can create employment opportunities across the country.
On the possibility of global manufacturing units shifting their base from China to India in the near future, Kirloskar said Indian companies must improve the quality and delivery of products while reducing costs to make a mark in international markets. (ANI)