November 24, 2016 1:03:45 am
The NDA government wants to know from businesses the additional steps required to mitigate their economic distress due to the sudden demonetisation of Rs 500 and Rs 1,000 currency notes.
Emails were sent out by Department of Industrial Policy & Promotion to business councils and forums early Wednesday to urgently provide “suggestions/feedback” for measures to facilitate the various industries “during the transition period of the demonetisation exercise”. Their voices would be consolidated and sent to the Prime Minister’s Office for consideration, said sources.
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On Monday, commerce and industry minister Nirmala Sitharaman held a similar discussion with the exporters and said that their requests would be sent as a report to the finance ministry.
Sources said the response so far was an expectation of a slash in excise duty to reduce prices and consequently, shore up demand. They are also seeking cost-cutting measures such as wage and interest subsidies to make them more competitive, sources said.
Indian producers have said that they were facing severe difficulty in sourcing inputs, paying workers and transporting goods all of which could shrink the growth rate of the economy. They expect demand to be impacted for at least a year.
Sources said the feedback exercise was initiated on Wednesday as the cash crunch among businesses continued. “It was expected to ease out on Monday but that day’s report showed that the situation had not ameliorated,” they said.
The National Institute of Public Finance and Policy (NIPFP) — a think tank affiliated with the finance ministry — said last week that the demonetisation could lead to “a contraction of economic activity”. Its November 14 report said if the withdrawn cash was being used in accounted transactions and the unorganised sector, the economic impact could be substantial — reducing incomes and employment.
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