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Sitharaman takes stock of coronavirus impact on economy

By Arup Roychoudhury and Sanjeeb Mukherjee
March 21, 2020 09:04 IST
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While the meetings on Friday were preliminary discussions, it is learnt that sectors like tourism; hospitality; aviation; micro, small and medium enterprises (MSMEs); and livestock have sought deferring loan repayments and temporary tax holidays in specific cases to help them tide over the steep fall in economic activity. 

IMAGE: Minister of State for Culture and Tourism (independent charge) Prahlad Singh Patel (2nd from right) meets Union Minister for Finance and Corporate Affairs Nirmala Sitharaman and her team, to assess the economic impact of covid-19 on the tourism sector, in New Delhi on March 20, 2020. Photograph: ANI Photo.

Union Finance Minister Nirmala Sitharaman on Friday met her ministerial colleagues and bureaucrats of various departments to assess the impact of the coronavirus pandemic. In multiple meetings, the ministries discussed the problems in their sectors, which are some of the worst-hit, and presented memorandums from stakeholders. 

While the meetings on Friday were preliminary discussions, Business Standard has learnt that sectors like tourism; hospitality; aviation; micro, small and medium enterprises (MSMEs); and livestock have sought deferring loan repayments and temporary tax holidays in specific cases to help them tide over the steep fall in economic activity. 

Friday’s meetings were a precursor to the meetings of the Covid-19 Economic Response Taskforce, which is yet to be constituted. 

 

“Officially the task force has not yet been constituted. We are holding the meetings because of the urgency of the situation. We have started work, and the work that we are doing right now will go into the task force as well,” Finance Minister Nirmala Sitharaman told reporters after the meeting. In his address to the nation on Thursday, the prime minister had announced the formation of the taskforce, to be led by Sitharaman. 

In four meetings, Sitharaman met Civil Aviation Minister Hardeep Puri, Animal Husbandry Minister Giriraj Singh, and Tourism Minister Prahlad Patel. The MSME ministry was represented by its secretary. Also present were Finance Secretary Ajay Bhushan Pandey, Economic Affairs Secretary Atanu Chakraborty, and the secretaries to the other ministries. 

“We held discussions with these ministries in detail. They had brought memorandums from the stakeholders in their respective sectors. We are in the stage of compiling all their demands,” Sitharaman said. 

A top official aware of the deliberations in the meetings said the ministers spoke about the difficulties being faced by their sectors and the possible measures that could be taken by the government and regulators. Loan repayment and tax relaxation were among the measures sought by industries in their memorandums. 

“There will be many meetings over the coming week once the task force is notified. Only after that may a detailed relief package be announced,” the official said. 

Sitharaman said senior policymakers in the finance ministry would meet on Saturday morning to discuss the way forward. 

Through its memorandum, the more than $14-billion Indian poultry industry asked for deferring all instalments on loans taken by poultry companies and small players for one year and working capital support to tide over the immediate crisis. 

“We don’t want our loans to become non-performing assets after 90 days if we are not able to repay our instalments as serving them is getting difficult with each passing day,” an executive of the sector said. 

He said the poultry industry, which is one of the biggest employers of small and marginal farmers in India, was suffering a daily loss of almost Rs 2,000 crore due to a massive slump in demand in view of false rumours that consuming non-vegetarian food hastened the Covid-19 infection. 

“This is absolutely untrue and despite best efforts and repeated advice sent by the Indian Council of Medical Research (ICMR), demand hasn’t picked up. The poultry industry directly employs almost 1 million small and marginal farmers whose livelihood is at stake due to the drop in demand,” the person said. 

“We hope the finance minister will consider our demand because our survival is directly linked to the survival of small and marginal farmers and unorganised sector workers,” said another senior representative of the Indian poultry industry. 

In the last few weeks, millions of chicken and eggs have been destroyed due to a sharp drop in demand over rumours surrounding Covid-19. Weak demand from the poultry sector has resulted in a sharp decline in feed prices too, with both soybean and maize prices falling by nearly 25 per cent in the past two months. The poultry market consumes around half the soybean and maize production in India. 

Finance ministry officials say that while the situation is fluid and there will be many meetings before a decision is taken, it still remains to be seen if loan repayment and tax relaxations will be provided for as much as a year. A call will also be taken on whether such relaxations will be sector-specific or not, or whether they will be for only MSMEs.

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Arup Roychoudhury and Sanjeeb Mukherjee in New Delhi
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