India needs to be brave and bring about reforms that touch the lives of common citizens, prime minister Narendra Modi said after his interaction with chief ministers to plan a road ahead for tackling COVID-19.
"We have to give importance to the economy as well as continue the fight against Covid-19," the prime minister said after the meeting.
This was the fourth such interaction that the prime minister had with the chief ministers, the earlier ones had been held on March 20, April 2 and April 11.
Prime minister said that the economy needed to be given importance even as the fight against COVID-19 continued.
"We have to be brave and bring in reforms that touch the lives of common citizens,” Modi said.
He also suggested that people associated with universities can be integrated on devising ways to fight the pandemic and strengthen research as well as innovation.
The COVID-19 pandemic has come at a time when there are a number of sectors where reforms are pending. India's labour laws have been variously accused to be archaic.
A parliamentary standing committee on April 23 gave its consent to the idea of allowing companies with up to 300 workers to fire people or close down units without prior approval of the government, a three-times increase from the current number.
The panel also advised the government to state this explicitly in the Industrial Relation Code bill.
“The Committee note(s) that as per Clause 77(1), the special provisions relating to lay-off, retrenchment and closure shall apply to an industrial establishment having not less than 100 workers or such number of workers as may be notified by the appropriate government. In this context, the committee notes that some state governments like Rajasthan have already increased the threshold to 300 workers, which according to the ministry has resulted in an increase in employment and decrease in retrenchment," the standing committee on labour said.
Recently, the Bharatiya Janata Party (BJP) sent some key suggestions on reviving the economy; land reforms was one of them.
Land acquisition is a difficult process in India, that is enmeshed in a number of laws. Stakeholders have long been asking the government to simplify the processes. At a time when economic activity is at its lowest,there is a need to reduce the overall cost of doing business, including reforms in the labour market, to attract investment investment again and spur growth.
India's financial markets also need bold reforms in order to be able to lend more efficiently. Instead of an overall recapitalisation of banks, the government and regulators could put specific fund related capital.
The already beleaguered non-banking financial companies (NBFC) are bracing for another crisis. NBFCs are bracing to repay banks at a time when their cash flows have taken a hard knock due to the coronavirus pandemic. With the demand for funds drying up in a hostile economic environment, their cash flows have been hit and they are also staring at the possibility of a rise in non-performing assets.
Banks are offering credit at rates above 8 percent depending on the tenor while borrowing funds from the RBI at 4.4 percent. NBFCs and HFCs have to give a three-month moratorium to their consumers on term loans, as suggested by the Reserve Bank of India (RBI) in March.
But, the majority of the banks are yet to decide on granting a moratorium to the NBFCs and HFCs that are availing credit like any other borrower.
