As economic activities slowly pace up, Chandrajit Banerjee, Director General of CII, has said that businesses should be allowed to function without uncertainties so that they are able to build on the “nascent” signs of recovery.
In a statement, he said that the uncertainties associated with the imposition of “mini lockdowns” should be done away with.
Banerjee said that with the easing of restrictions and the economy entering an “Unlock” phase from June, the high frequency indicators which are coming in have been showing a material improvement as compared to the multi-year lows seen in April.
He noted that a number of indicators including GST collections, railway freight traffic, petrol consumption, peak power demand, electronic toll collections among others have all mirrored the incipient signs of recovery.
“Though still early, these are indeed promising signs, pointing towards a V-shaped recovery in the immediate aftermath of the lockdown. In order to nurture the nascent signs of recovery, it is important to mitigate the uncertainties that are currently prevailing regarding the restrictions,” he said.
Banerjee said that corporates are unable to plan beyond a horizon of a few weeks, affecting all operations.
He was of the view that even though the early signs of recovery are encouraging, it is critical to build on these, by deploying all the policy levers. Business activities must be allowed to function by removing the uncertainties associated with imposing “mini lockdowns”, Banerjee added.
“Although it is not possible to predict the course of the pandemic, a dashboard approach, triggering predictable responses based on the progression of infections, can reduce uncertainty and boost both consumer and industry confidence, which in turn will support demand and investment recovery”, he said.
Further, in order to ensure that the supply chains function seamlessly across state and district boundaries, including the containment zones, the latter should be limited to micro areas instead of a wider area, the Director General of the key industry body said.
He said that the government has played a big role in driving the nascent recovery process by providing direct cash and food transfers to the rural and urban poor.
“In a significant confidence building measure, it is encouraging to note that the government dues to the industry have started coming in, which are likely to serve as a big and direct liquidity booster to industry.”
He noted that the rural sector propelled by agriculture has done well. Apart from the rural sector, there are significant variations in the performance of different sectors including pharmaceuticals and FMCG.
“Consumer facing industries, such as staple based FMCG, are likely to grow at 15-20 per cent in FY21, primarily on account of an increase in in-house consumption of food and greater demand for sanitation and hygiene products”, Banerjee said.
In contrast, sectors such as aviation, hotels and commercial vehicles are still stressed, he noted.