New Delhi, April 14: In view of the rising coronavirus cases in the country, PM Narendra Modi extended the nationwide lockdown till May 3. While India Inc welcomed the move, they insisted on the need for a stimulus package from the government to rebuild the economy affected the coronavirus pandemic. As per estimates shared by industry bodies, India may be losing close to Rs 40,000 crore daily due to the national lockdown with an estimated loss amounting to Rs 7-8 lakh crore during the past 21 days. PM Narendra Modi Urges Employers Not to Resort to Layoffs Amid COVID-19 Lockdown, Makes 7-Point Appeal.

Due to the impact of coronavirus, several companies have already resorted to salary cuts, firing and furlough. The government last month announced a Rs 1.7 lakh crore package aimed at providing relief to those hit hard by the lockdown as well as an insurance cover for healthcare professionals handling virus-infected people. The number of coronavirus cases in India crossed 10,000 on Tuesday and the death toll soared to 339, leaving no option with the government other than extending the lockdown. Coronavirus Cases in India Cross 10000-Mark, Total 1035 Cured So Far, Death Toll Rises to 339.

Lockdown Cripples Economy

While this move of extending the lockdown was needed from the humanitarian grounds, but it has already caused a devastating impact on the economy. According to Nomura, the lockdown has crippled more than 75 percent of the economy and the Japanese investment firm has predicted that there would be almost 4.5 percent drop in GDP due to the effects of the coronavirus in the financial year 2021. Coronavirus Effect: India's GDP May Slip Below 3% in FY21 if COVID-19 Proliferates, Says KPMG Report.

The slower economic growth means that company earnings will be hurt, and that would hit the prices of stocks and certain bond. According to KPMG, the lockdown in India will have a sizeable impact on the economy mainly on consumption which is the biggest component of GDP. A KPMG report had highlighted that India's growth could slip below 3 per cent in the current fiscal if COVID-19 proliferates within India, the lockdown further extends and the global economy slipping into recession,

Job Losses, Pay Cuts

The Industry body, FICCI has predicted that nearly 40 million jobs are at risk during the period April-Sept 2020. More than 15 million jobs could be lost in India’s export sector due to half of all orders getting cancelled and units unable to repay loans due to the coronavirus pandemic and the ensuing lockdown, the apex body of exporters recently said.

The gloomy scenario is the same across all the industries.  There will also be a freeze on hiring over the next few quarters, thus putting more stress on the economy. Some of the worst-hit sectors are- automobile and auto-components, MSMEs, consumer durables and capital goods sectors. The e-commerce, hospitality, tourism and other industries are also hit due to the lockdown.  Therefore, the need of the hour is government should dole out urgent relief package.

What is a Stimulus Package?

A stimulus package is a package of economic measures, which the government puts together to help revive the floundering economy. The objective of a stimulus package is to reinvigorate the economy and prevent or reverse a recession by giving a boost to employment and spending.

Last month, India announced an economic stimulus package worth 1.7 trillion rupees ($22.5 billion), designed to help millions of low-income households cope during the 21-days lockdown due to the coronavirus outbreak. The package was disbursed through food security measures for poor households and through direct cash transfers. However, now with the lockdown extension till May 3, India Inc expects fresh stimulus package from Narendra Modi government which will help them tide through this difficult time.

(The above story first appeared on LatestLY on Apr 14, 2020 04:23 PM IST. For more news and updates on politics, world, sports, entertainment and lifestyle, log on to our website latestly.com).