Is it a perception of fear in India as well, why government is not working on how to help businesses survive? If entire capitalism breaksdown, will govt be able to support the economy and the mass laid off people? Pl help!! @FinMinIndia @PMOIndia @narendramodi
March is a usually a difficult month in terms of liquidity, Covid19 and resulting dramatic slowdown has made it even more acute. Most businesses are forced to conserve cash as next few months are very uncertain. This will put stress to entire supply chain for next few months
This has a domino effect, which will likely lead to next round of defaults (as supply chains run out of cash due to demand destruction and cash conservation due to covid19). It could be a systemic issue where an already fragile banking and NBFC sector see next round of default.
impact 1 - Most small businesses will default leading to their credit rating being -ve due to this temporary COVID19 crises, but no one will lend to them later due to this pandemic induced default. It has far reaching implications and will take many months for them to be back up.
Impact 2 - lack of confidence of businesses leading to first halt in hiring and even layoffs, as both Cash and Confidence (which are already running low) run out. We are not able to provide enough jobs to our youth but further job losses will make it even more difficult.
Impact 3 - as businesses and individuals loses business and jobs they will likely default leading to next wave of defaults in NBFCs and Banks. Only a handful of banks and NBFCs have balance sheet ability to survive the shock, NBFCs will again be hardest hit.
Potential solutions -
1) Waive interest and penalties for delay in payment of taxes for next 1 quarter to start with.
2) incentivise businesses with cash to pay up on time, e.g. x% / x amount waiver.
1) Waive interest and penalties for delay in payment of taxes for next 1 quarter to start with.
2) incentivise businesses with cash to pay up on time, e.g. x% / x amount waiver.
3. Support with Credit line - businesses and NBFCs alike with need support over next few months to roll-over their respective debts as demand has crashed in various sectors. @RBI @FinMinIndia needs to be proactive rather than reactive.
4. Incentivise businesses to retain and hire more people in the impending (already) slowdown by providing tax incentives. E.g. 125-150% deduction on people cost for IT purposes. @nsitharaman
Please focus on creating incentives for desired behaviour rather than only focussing on penalising for undesired behaviour. We will come out of this slowdown (and not get into recession) under your leadership. @PMOIndia @narendramodi @nsitharaman @FinMinIndia @RBI
