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The recommended Ten Steps:

Any calibrated approach to ‘restarting the economy’ should include the following 10 steps:

1. Relax the fiscal deficit target:

Stretching the deficit target to release money which can be used for well-directed income transfers and food support, facilitate business disruption loans by offering guarantee to commercial banks, soften the blow to services, and upgrade health infrastructure.

2. Liquidity support to small businesses:

Provide specific funding lines to improve the liquidity of smaller entities without exposing banks to additional risks.

3. Logistics and price support to farmers for Rabi harvest:

The food supply chain shouldn’t be broken and farmgate prices shouldn’t crash. Improve supply chain logistics and procurement and allow Agricultural produce market committees (APMCs) to operate for pre-defined durations, so that farmers can sell their perishables.

4. Middle-class relief:

A temporary reduction in personal tax rates for low-income brackets is in order.

5. Extend moratorium on bank loans:

Given the expectation of continued cash-flow volatility in various sectors, moratorium on loans may be extended by 90 days.

6. Turn the liquidity spigot towards debt markets:

Ensure the Targeted Long-Term Repo Operations (TLTRO) window of Rs 1lakh crore flows into the larger corporate bond and commercial paper market as intended, and isn’t limited to AAA bonds.

7. Liquidity support to NBFCs:

Liquidity support to NBFCs will enhance market confidence in NBFCs and improve the resilience of the Indian financial system. Consultation with key stakeholders can be considered to finalise specific measures.

8. Back corporates:

Timeline or limited period deferral for payment of advance can be extended; Special Covid-19 loans at concessional rates can be provided; Tax funds can be released quickly while force majeure clause by governments and their agencies are reasonably interpreted.

9. Forbearance on capital market debt repayments:

This will be important to release the liquidity pressure on corporates and NBFCs.

10. Deferral of repayments:

Defer scheduled pass-through certificate (PTC) repayments for a specific period, in line with the moratorium granted to instalment payments of underlying borrowers, as these instruments are structurally pass-through in nature.


Post-Covid, developed economies will move production back home at a faster pace. The overall labour-arbitrage pie in manufacturing will shrink, and competitive economies will gain a larger share. So, it is time to raise, if not change, our game.

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September 2022