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Minimising coronavirus damage: After poor, govt must now focus on small businesses, industries

FE Online

The lockdown situation could lead to one of every three retail stores in the country shutting shop.

The lockdown situation could lead to one of every three retail stores in the country shutting shop.

While Finance Minister Nirmala Sitharaman has announced a Rs 1.7 lakh crore economic package for the most vulnerable sections of the society, it must now focus on the small business and specific industries such as aviation to keep the financial system running and minimise the coronavirus impact. The outbreak is already threatening a 4% reduction in India's GDP as the country remains under a 21-day lockdown period. While the global situation remains dynamic, forecasts do have margin of error but considering the broader picture, 37% of India's total output remains under pressure due to the lockdown, Neelkanth Mishra writes in The Indian Express.

The current date of lifting the lockdown stands at 14 April, however, the same may get extended if the coronavirus spread continues its trajectory. Several industries are staring at losses in that period with the Retailers' Association of India (RAI) warning that the lockdown situation could lead to one of every three retail stores in the country shutting shop. The job losses will follow and about 18 lakh people from the retail sector alone will be jobless in this scenario, RAI said this week. 

Minimising damage

Sustaining economic activity is an option by using the cash reserves, past savings and borrowing from the future. The same can be done by not only the government or private firms but also by the individuals. But migrant workers, daily wage earners might not have the option of dipping in their cash reserves; they can neither borrow easily. The government induced stimulus of both monetary help and food security might be able to help them. 

For future stimulus announcements, the government can now support industries such as airlines, travel and tourism and small players because they are now next in the firing line. The government can release second funding in the system after the lockdown lifts and losses have been assessed. This would be to stimulate economic growth, Neelkanth Mishra added.