NAREDCO seek quick holistic fiscal package to safeguard Indian Industries, recuperate businesses and boost economy

In the unprecedented crisis impacting the Indian economy as a result of COVID-19 pandemic, one of the biggest worries is that global investors may take over Indian companies at very low-price points, unless bankruptcy and insolvency laws are temporarily suspended.  In a media interaction, Dr. Niranjan Hiranandani pointed out that global investors are waiting for Indian stocks to fall in value, to take over these listed companies at throwaway prices. “Hence in lieu of protecting the Indian companies, suspension of NCLT law for at least 6 months is imperative to salvage the capital erosion” he said.

Tough times seeks exceptional measures to thwart one of the deepest recessions recorded across the globe. Retrieving industry out of economic meltdown, govt of India is looked upon to follow world economies to institute stimulus package upto 10 percent of nation's Gross Domestic Product (GDP). Industry seeks urgent infusion of nearly $200 billion which can pump into the market in a staggered manner to retrieve the business cycle without incurring further economic loss. The industry seeks working capital to ensure that the Indian economy doesn't tank; business organizations don't default and saddle banks with NPAs, as also cause job losses, he emphasized.

The economic turmoil is rightly equated as cancer and fiscal stimulus in way of crocin lacks bandwidth to cure the deep and bigger ailment that the nation is enduring. The current economic menace urges for chemotherapy dosages to combat economic meltdown. India Inc ensures that COVID-19 challenge will be handled under the best central and state leadership working to mitigate the aftermath as best possible. The economic aspect needs to dealt with quickly.

Dr. Niranjan Hiranandani conservatively estimated the losses to real estate as of the present at Rs 1 lakh crore, and rising with each passing day. He suggested that the economic stimulus package for all industries across the economy should be at least 10 per cent of the country's GDP. “If you can overcome the crisis today, you may be able to stand up tomorrow,” he explained. Stressing on the need for a one-time rollover for debt restructuring as also provision and working capital requirement as a 'must do' as part of the economic stimulus package, he said more credit supply needs to be extended to industries across the economy.

Post the pandemic, he estimated delays in on-going projects to range from 3 months to a year and half, depending upon the stage of the project and location, among other factors. Site labor remains major issue, unless they get back to routine work under strong adherence of COVID19 guidelines and paid for the same, they will end up returning to their villages and shifting to agriculture. This will translate into lack of skilled workers across various industries in cities morphing into agricultural labor, and to prevent this, it stands imperative to permit work to restart at construction sites where labor are present and being looked after.

The revival story post the pandemic would largely be driven by the need-based customers, and 'affordable housing' segment should be first off the starter's block. The challenge that real estate would face was whether they wanted to work in the high-end segment or affordable segment. “It is like the automobile industry, India sells million-plus Maruti cars vis-à-vis a few thousand luxury cars. It is the same in real estate, the Maruti car segment - affordable housing - has much larger demand, and real estate business will have to adapt to the change circumstances.

On the possible fall in prices post the pandemic, he said price-points would come down as there would be some 'desperate to sell', but this would again depend upon location and type/ segment of individual projects. It is not price; we need a vibrant economy. The success of any business will depend upon this. Industries across India, including real estate, will be driven by demand rather than price correction.

Will depend upon location, segment. There is a possibility that some segments, like ready possession homes in certain locations, may command a premium if delays for under construction projects increases post the lockdown. Commercial realty may bounce back over a period of 6 months to a year, and this will obviously have an impact on the residential segment.

He stressed on the need for a roll-over as was done in 2007-08; pointing out that the present situation was far worse and definitely warranted both, the roll-over as also availability of low cost credit, if the Indian economy was to survive the crisis; ensure no more job losses as also bankruptcies, which in turn would result in NPAs and cripple the Indian banking system. “Deficit financing, if needed, can be implemented. The situation is bleak; we need to ensure that we come out of this not just alive, but also with a vibrant, functional economy,” he said.

Dr Niranjan Hiranandani - National President - NAREDCO and Assocham.

Hits: 465