Sun, 26 Apr 2020 03:01 PM IST
New Delhi | Tarun Gupta: As the world continues to flutter from the cataclysmic pandemic, the discussion on saving livelihoods along with lives has intensified. The Reserve Bank of India’s second tranche of monetary stimulus has been greeted with relief. The conventional wisdom, however, remains that the central bank measures are a modicum. The ball is in the court of the government and it has been there for sometime now.
The quantum and the modalities of the government intervention or what people better versed would term ‘fiscal stimulus’ is for the erudite economists to deliberate and draft. There is unlikely to be a perfect and acceptable to all solution. What is universally realized is that the catastrophe will change the world in unimaginable ways.
There is an overwhelming sentiment holding China responsible for the calamity. Despite Beijing’s public relations blitzkrieg attempting to project itself as a world leader of counter pandemic exercise, the facts are contrarian. In the absence of corroborative evidence, we may choose to discard the conspiracy theorists alleging sinister plans, yet the truth remains that the origin place of the Covid 19 virus as was the case with SARS, has been China. Well that might be plain coincidence and misfortune? Be that as it may, the surreptitious conduct of the ruling dispensation of China by not sharing timely information with the world is undeniable. This furtive approach, obdurate opacity has transformed what could have been a local disease into an unmitigated pandemic that has wrecked havoc.
This Chinese callousness has unsurprisingly stirred debate whether there might be a shake up in the world order? With this dent in dragon’s image, is there an opportunity for India? Will the developed world mull loosening China’s grip on global supply chains? Does India have the ability to supplant? In all fairness, haven’t we romanticized this precept for decades? Well drawing room, or more apt in these times, zoom conversations aside, we aren’t as naïve to believe that this emotional outburst alone will be sufficient to pull back China and catapult us.
We are aware of the chasm that separates us from not just China but some of the other competing economies as well. Our infrastructure, land/labor regulations, capital constraints, taxation, judicial delays remain formidable impediments that need to be addressed. That of course is a long-term agenda and in the immediate aftermath, there are far more pressing urgencies. As of now a major concern is the despondence that seems to dampen the spirit of the entrepreneur community.
The government is posed with a vexed problem. We simply do not have the resources to extend the kind of bail out package as the first world. Nevertheless, the state’s intent to protect and promote its industry and business must be unambiguous. The visible intent and action to protect the vulnerable sections is laudable. The grievance is that private business has missed such benignity hitherto. If we expect businessmen to be as benevolent to pay the remuneration for the lockdown period, a reciprocal largess from the government to them is only par for the course. Three-month moratoriums for bank installment, allowing delayed filing of returns are essential yet insufficient comforts. It is anticipated that the government would announce a relief package, however, this delay is only adding anxiety to the woes.
One common streak in investors worldwide is that they abhor uncertainty. A couple of contentious issues deserve attention:
There have been news reports suggesting that legally private business cannot be coerced into paying remuneration for the period of shutdown. There isn’t any such provision in the disaster management act or any other statute. We may safely assume that that matter is likely to be argued in courtrooms.
Another knotty subject might be the invocation of the Force Majeure clause in lease agreements. Some of the large corporations have been reported to attempt to wriggle out of paying rent, seeking protection under the aegis of the clause that in law permits escape where unforeseeable circumstances prevent the fulfillment of a contractual obligation. Whether the circumstances constitute a genuine albatross or endeavored to be used as a fig leaf by the lessees might again have to be adjudicated in a court of law.
The worry here is that in an overburdened judiciary with monumental pendency, additional disputes help no one. Why can the executive and the judiciary not issue a notification/order clarifying the precise legal position? It will avoid probable litigation. Besides, lack of clarity leads to speculation, conjecture and confusion. Lucidity and transparency in state policy and action are essential attributes of a conducive business environment.
We will take long to upgrade our infrastructure to the level of China. Given the pulls and pressures of our polity - the land/labor regulations, capital markets, tax laws, judicial tardiness are also expected to evolve only gradually. However, the primary requirement for an upbeat business environment is perspicuous policy and prompt and cogent expression of an accommodative intent on the part of the state. We cannot shillyshally on that count.
It is often said that worse than helplessness is hopelessness. We cannot afford to let our business community slide into the latter. The time to act is now.
(The article is an opinion piece by Tarun Gupta. The views expressed in the article are of the author and Jagran English does not take the responsibility of the views expressed here)