According to the first advanced estimates of Central Statistical Office, India’s GDP is expected to grow at 5 per cent in 2019-20, a 10-year low.
Finance minister Nirmala Sitharaman
New Delhi: With the spread of novel coronavirus (COVID-19) across the world and several nations imposing mandatory quarantine on movement of people and goods, leading to fear of price rise and shortage, the government is expected to announce some relief measures after assessing the impact of the epidemic on Indian businesses and economy.
The move follows finance minister Nirmala Sitharaman’s meeting with industry representatives and other stakeholders on Tuesday afternoon, according to a top government source.
Due to the shift of import of raw material from China to Middle East and Europe, and congestion of goods at India’s eastern ports, there are fears of massive price hikes, especially of plants, machinery, petrochemicals. Several industries have also raised concerns over the reduced supply of masks for both Indian and Chinese manpower at their manufacturing bases in China.
That’s why, the source said, the industry is seeking a reduction in the quarantine period for people and consignments coming from China.
“We are informed that India Inc is very much concerned over the outbreak of coronavirus following which there is a possibility of massive price hikes due to shift of import of raw material from China to Middle East or Europe. The government will soon announce measures to deal with the impact of the outbreak on the domestic industry. Almost all industry bodies have also cautioned price hikes on plants, machinery, petrochemicals due to congestion at the Eastern Indian ports,” said the source.
Ms Sitharaman, however, said, “There are no concerns about price rise so far due to coronavirus and it is too early to talk about the impact of Covid-19 outbreak on the Make in India initiative. There were no reports of shortage of medicines or medical equipment, instead the pharma industry is asking for lifting of ban on exports of certain items. However, there could be some disruptions in supplies and concerns have been expressed by the representative of pharma, solar and chemical industries”.
She added that she would hold a meeting with the secretaries of different ministries on Wednesday and then announce steps to deal with the situation in consultation with the Prime Minister’s Office.
“Pharmaceutical as well as petrochemical firms are asking for relaxations especially on API imports as well as special provision in GST law for issuing deemed export license since they are on a decline because of shutdown in Wuhan, the main coronavirus impacted area,” the source said.
The petrochemicals industry, however, has demanded that the quarantine period to be hiked as it gives them more time to balance and process their supply.
The Confederation of Indian Industry (CII) said in a report that India as well as other countries need to have strategies for “minimising risks and managing the situation”.
“China is facing a quarantine-like situation with movement of goods and people to and from the country facing a lockdown. While the situation for human impact is very serious, the economic impact will cascade into loss of employment, markets, and small enterprises,” it said.
It proposed a three-pronged strategy to be implemented by the government. “On the import side, it proposed minimizing risks to key sectors arising from supply chain disruptions. It also suggested leveraging opportunities to be an alternative destination of exports and keep supply chains running and leverage excess capacity to protect the domestic industry,” the source said.
According to the first advanced estimates of Central Statistical Office (CSO), India’s GDP is expected to grow at 5 per cent in 2019-20, a 10-year low.
The recently release official trade data reflected the impact of the epidemic on both exports and imports. India’s merchandise exports in January 2020 fell by 1.66 per cent in January to $25.97 billion and imports dropped by 0.75 per cent to $41.14 billion on an annual basis amidst rising fear of global trade disruptions due to the spread of the coronavirus.