“We strongly believe that the government should come out with a massive public investment stimulus sooner than later to help facilitate and complete the pipeline of national infrastructure projects of Rs 100 lakh crore,” the Bombay Chamber of Commerce and Industry suggested to Reserve Bank of India governor Shaktikanta Das, during pre-consultations for the monetary policy expected next month.
A combination of borrowings from central public sector enterprises (CPSEs) and central government could be considered to finance the stimulus, which in turn could be channelled into relevant projects, said the industry body.
“This will surely have a multiplier effect on the overall economy leading to a virtuous cycle of greater disposable income, increased demand and finally increased private investments,” said the Bombay Chamber of Commerce and Industry.
The suggestions came on the back of findings from an industry-wide survey which showed that businesses fear negative top-line growth and economic impact due to the Covid-19 pandemic to extend to the next three quarters or more. To revive the economy, businesses suggested salary cuts of 10-30%.
While challenges to ongoing business such as availability of cash credit, foreign exchange operations and goods and service tax (GST) related issues were flagged in the survey, a large majority was concerned about rising energy prices as well.
“Bankers and/or financial institutions are more conservative now than in the previous period,” the survey found, along with the fact that there was a delay in sanctioning working capital loans as well as insistence on securitising the loans.
The challenges are likely to lead to a 5% increase in input prices and a sharper rise of 8.25% in output prices, according to the survey.