Retailers Association of India (RAI) has urged the government to take steps for capital infusion into the retail industry with ECLGS benefits and a loan moratorium.
Speaking about the state of the Indian Retail Industry, Kumar Rajagopalan, CEO of RAI, said: “The retail industry in India has been in a perpetual paradox ever since the first set of restrictions began last year in March 2020. The businesses and the workforce in retail need to be cushioned by the government or the local authorities to ease off their hardships.”
He further said that the two most important and immediate steps to prevent this industry from collapsing are prioritizing vaccination of the last mile workers and urgently providing financial support.
RAI noted that as the days of the lockdown drag on, it is increasingly difficult for retailers to retain employees and keep their businesses afloat. Retailers need to pay salaries, minimum electricity, rentals, property taxes, etc, even if the businesses are shut down due to the lockdown.
The cash inflow of the industry has come to a standstill while the fixed operating cost remains intact.
The immense financial stress faced by the retail sector will adversely impact both livelihood and the financial institutions exposure to the sector as retailers start to become insolvent. Millions of MSME suppliers too get no payment from the industry participants.
RAI has recommended that the Ministry of Finance and the Reserve Bank of India step in to bring some relief to the mounting stress on the retail business in the wake of the second wave of Covid -19.
It noted that corporate retail outlets is one of the 26 sectors, selected by the Kamath panel under the ‘Resolution Framework for Covid-related Stress’. While this was mentioned in the announcement of ECLGS 2.0 it has not been clarified in the notification which announced ECLGS 3.0.
“This needs to be clarified and ECLGS funds made available to the retail sector immediately. Availability of additional funding to eligible retail businesses will go a long way in contributing to retail revival and protecting jobs,” it said.
It further sought a moratorium on principal and interest for six months for the 26 stressed sectors.
RAI also asked the government and the RBI to mandate banks to give ad-hoc working capital loans of 30 per cent more than current limits so that critical payments like salaries and wages can be made, among other recommendations.