A slew of measures announced by the government as part of Rs 6.29 lakh crore economic package will give an impetus to growth and are expected to address the severe cash flow crunch faced by businesses due to the second wave of the Covid pandemic, industry players and exporters said on Monday.
To help revive the coronavirus pandemic-hit economy, Finance Minister Nirmala Sitharaman on Monday announced a slew of measures, including Rs 1.1 lakh crore credit guarantee scheme for improving health infrastructure, and enhancing the limit under the ECLGS by 50 per cent to Rs 4.5 lakh crore for the MSME sector facing liquidity crunch.
Industry chamber PHDCCI said the measures will bring a broad-based economic recovery through enhanced demand, private investments, manufacturing competitiveness, exports, increased agricultural productivity and strong build-up of health infrastructure in non-metropolitan cities.
The measures "will push the economic growth trajectory on high road sooner than later," it said.
CII said the measures are expected to address the severe cash flow distress precipitated by the business disruptions caused by the lockdowns in the wake of second wave of the pandemic. "The additional tranche of economic revival measures with Rs 6.29 lakh crore spend announced will impart a significant impetus to growth this year," it said.
Welcoming the steps, former president of Federation for Indian Exports Organisations (FIEO), S K Saraf, said that the measures would help in reviving the economic growth and boosting exports.
"Insurance cover to ECGC will give a big boost to export sector and comfort to the exporting community in this crisis period," Saraf said.
Council for Leather Exports (CLE) Chairman Sanjay Leekha said that the announcements will help in growth of exports from the sector and the proposal to infuse equity in ECGC will provide the much needed risk coverage in the current pandemic situation.
"The extension of Emergency Credit Line Guarantee Scheme (ECGLS) and also launch of loan guarantee scheme for Covid-affected sectors will be of great help to the exporters," he said.
Apparel Export Promotion Council (AEPC) Chairman A Sakthivel said the decisions for additional Rs 1.5 lakh crore provision for ECLGS and infusion of equity in Export Credit Guarantee Corporation (ECGC) over 5 years to boost merchandise export insurance cover by Rs 88,000 crore will significantly benefit the MSMEs and exporters.
Assocham said the steps are aimed at providing relief to the sectors hit hard by the Covid 19 pandemic and the package can be termed as the ''lifeline dose'' to a wide number of sectors.
Industry body Ficci said this was the need of the hour. The direct support offered to the tourism and travel sector was much needed as it has been severely hit in the first two waves of the pandemic and continues to face heat due to the uncertainty that prevails, it added.
Vikash Agarwal, President of Indian Chamber of Commerce (ICC) said that this timely intervention will definitely provide a boost to sectors like health, micro finance, tourism, fertilizer, export, digital connectivity, and electronics.
Aditi Nayar, Chief Economist, ICRA Ltd, said the announcements contained a mix of new schemes focussed on relief for the pandemic-affected sectors, and extension of earlier schemes.
"Setting aside the guarantee schemes and the announcements that had already been made prior to today, the step up in the fiscal outgo within FY'2022 based on the fresh announcements is estimated at around Rs 0.6 trillion," she said.
Schemes worth Rs 2.4 trillion are spread over the next two to four years and some of these had already been announced at the time of the Budget, and therefore, a portion of their cost has already been factored in, she added.
Rupinder Malik, Partner, J Sagar Associates said extending Aatmanirbhar Bharat Rozgar Yojana till 31st March 2022 may prevent job losses in low income labour intensive industries.