In these hard times of global recession and COVID-19 businesses around the world has got affected due to several reasons
1. Lock down
2. Less supply
3. More demand (In cases of household and essentials supplies)
4. More supply less demand(Air conditioner,Fruits)
5. Change in Customer behavior
6. No labour supply
7. No Online orders
Above mentioned are only least but the above consequences are very harsh. It has been predicted that India will grow at the rate of 2 % considering the present rate of 4.2%.
Local businesses are the most affected areas where without a financial package no recovery is seen to be in coming years.
Fiscal deficit is increasing.Although demand for fuel has gone down significantly.Dollar rate at highest till date INR 76=1$.
What global economists say ?
Last week we concluded that the Covid-19 shock would produce a global recession as nearly all of the world contracts over the three months between February and April,” noted Bruce Kasman, head of global economic research at JP Morgan.
“There is no longer doubt that the longest global expansion on record will end this quarter. The key outlook issue now is gauging the depth and the duration of the 2020 recession.”
What will happen when the Lockdown ends ?
Definitely people are going to save the funds and not spend in coming months which will further take our economy to lowest consumption rates.May be we are going to Notice Empty Malls,restaurants.People are going to spend only on necessities.
Whats the wayout ?
Well RBI and Government has already taken some minor steps although it is not going to curb the slowdown we are going to face.
RBI- Reducing of repo rates-
How this will help ?
People will get loans at eased rates of interest which is going to increase the consumption and somehow will help reduce the slowdown.
Government-Package of 1.7 lakh crores
How this will help ?
Major points of the package.
ORGANISED SECTOR
The government said it will pay the entire provident fund contribution of those who earn less than Rs 15,000 per month in companies having less than 100 workers as they are at risk of losing their jobs. That amounts to 24% of basic pay--12% from the employee and 12% from the employer. This will be paid by the government for three months.
“This would prevent disruption in their employment,” a finance ministry statement said.
In addition, the Employees’ Provident Fund Regulations will be amended to include the coronavirus pandemic as grounds for allowing a non-refundable advance of 75% of the corpus or three months of wages, whichever is lower, from their accounts.
INDUSTRY DEMAND
India Inc sought help for distressed businesses across sectors such as tourism, hospitality, automobiles and aviation, besides micro, small and medium enterprises (MSMEs), where cash flows are down to a trickle amid mandatory adherence to tax and statutory payments.
What we expect from Government?
Well its clear a big relief package for the industry. we already had a tax relief last year .
And a policy should be made out for future so that we can bailout the industries in such hard times.
I hope the above information is helpful to you
CA. Kumar Sanu
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