The Associated Chambers of Commerce and Industry of India (ASSOCHAM) recently suggested a 16-point agenda and a stimulus package of $200-$300 billion over the next 12-18 months to thwart the recession resulting from COVID-19. Out of the corpus, $50-100 billion needs to be infused in three months to arrest job loss and compensate for loss of income.

According to ASSOCHAM, the government should proceed with three objectives including immediate assistance to employees and labour through direct transfers and through employers, ensuring companies have enough cash flow to survive the downturn, and stimulating demand and investment to revive the economy through fiscal and tax measures.

The government also needs to modify the Fiscal Responsibility and Budget Management Act (FRBM) Act, 2003, to consider the debt to gross domestic product (GDP) ratio, and not fiscal deficit, as a metric, according to an ASOCHAM press release.

With deflation expected in overall demand, the government should implement the National Infrastructure Plan once immediately after the lockdown is over. ASSOCHAM also recommended reduction in GST across the board by 50 per cent for three months and 25 per cent for the current fiscal.

Corporate tax for all entities in India should be reduced to 20 per cent, ASSOCHAM suggested, apart from recommending 125 per cent weighted deduction for labour and wage costs if employment continues for two years, i.e. till March 31, 2022.

The trade chamber also suggested that several selective but key sectors, including retail, essential manufacturing, large construction and infrastructure projects, should be allowed to resume operations, with strict adherence to social distancing norms and other precautionary measures. This would help mitigate the business and job loss.