The Coronavirus pandemic has affected economies worldwide. For growing nations like India, a 3+ week lockdown and suspension of business has resulted in significant setbacks to startups. Companies need an immediate rebate across multiple channels of commerce to keep business from going below profit margins.
Other nations like Canada, the US, the UK, Singapore, and Germany have issued far-reaching policies to help businesses weather the tide. However, the Indian government does not seem to be taking any definitive steps in this direction.
See Also : 10 Major RBI Announcements in Response to Coronavirus Outbreak in India
What Steps Has the Indian Government Taken to Help Startups During Coronavirus in India?
At present, there are only a few notifications to businesses from state governments decreeing no deferring in salary payment due to the COVID lockdown. Alongside this, the RBI has issued policy directives to defer loan repayments by three months. It is not enough to help startups cover for their losses during Coronavirus in India.
Here are a few essential steps that the national and state governments must take to mitigate the economic slowdown from COVID-19:
3 Steps Government of India Must Take to Help Startups after Coronavirus in India
1. Assistance in Wage Payment
The first financial hurdle faced by the startup industry in India is paying wages. The government has mandated that businesses will not pay employees less than their monthly wage because of the lockdown. It puts a financial burden on startups and can seriously hamper the road to recovery. To avoid this, the government should look to reimburse startups for their wage payment for at least the next few months.
2. Short-Term Loans on Easy Terms
Recovering from COVID-19’s economic impact will take some time. Experts estimate that about 3 to 4 months is a minimum. Startups will need to re-establish themselves as names in their market if they have not secured their position already. It will require a cash injection, and the government should step in to fill this role. The UK government, among others, is giving tax cuts worth 20 billion pounds to cover for the loans companies will take. The Indian government should follow a similar strategy if it wants to let companies recover from Coronavirus in India.
3. GST Deference
GST deference is another crucial move that can help startups overcome their losses. The impact of Coronavirus in India is best handled by allowing them to take the impending 6-month GST tax payment and extend it into a 3-year plan. These deferred payments are most likely to help the industries suffering the most from the COVID-19 lockdown. These include hospitality, tourism, and aviation.
See Also : 5 Ways Entrepreneurs Can Grow Their Startups During Coronavirus Lockdown in India
Conclusion
Coronavirus in India has caused a lot of problems for a lot of industries. Companies that have recently started operating need to shape up fast once the lockdown is lifted. It can only happen if the government steps in to give businesses a leg up they need to recover their economic momentum. The three steps above are the first in many that will help startups in India overcome the adverse effect of the Coronavirus.
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See Also : Coronavirus Impact on Indian Economy
