As many countries afflicted by the deadly coronavirus have stepped up efforts to save economy and businesses in the fallout of the virtual lockdown, travel bans and suspension of business activities, the demand for tax cuts, relaxed NPA norms and cash transfers has grown in India.

The benchmark indices Sensex and Nifty crashed around one-third from their peaks in January this year, while the rupee hit Rs 75 a dollar, reflecting gloom and doom in the economy post the outbreak of coronavirus.

Given the situation, like many countries in the West, India needs to come out with an economic assistance or a rescue package to support the economy. There are strong speculations that Prime Minister Narendra Modi might announce an economic package tonight in his address to the nation.

Economists suggest that the government should take steps on both monetary and fiscal front as well as work in co-ordination with the state to tide over the situation. Key announcements expected are rate cuts and relaxation in NPA norms for sectors impacted by the coronavirus outbreak.

"Just like any other country, we need to support our economy. Cut interest rates, do an intervention in the market to buy gilts, PSU bonds and high credit corporate bonds. Provide loan subvention to industry which needs support," says Nilesh Shah, MD, Kotak AMC.

"Banks should be allowed to consider a temporary restructuring of loan terms for the most-affected borrowers," says Sachchinand Shukla, chief economist, Mahindra Group.

Shukla also says fiscal response will require addressing families' and firms' balance sheets. He is in favour of targeted measures for directly affected sectors such as aviation, retail and leisure etc.

The steps directly helping the affected sectors include (GST) rate cuts and deferral of tax payments.

"In days to come, the struggling sectors particularly travel, hotel, food industry will certainly approach the GST Council as well as the government to request a reduction in GST rates to enable them to get over the loss of business. We hope the GST Council looks into the aforesaid on a priority basis and announce a suo moto reduction in GST rates for the impacted sectors including travel, hotel and food industry," says Pritam Mahure, a Pune-based chartered accountant.

Experts also demand special packages for individuals, especially, those working in the unorganised sector. An SBI research report says that the increased excise revenue from oil should not be used for bridging the fiscal gap and pleasing the markets, rather it must be used as a fiscal package for income support to the people working in the unorganised sector who are already facing the brunt of loss of jobs.  

Sachchinand Shukla of Mahindra Group says government should leave more money into the hands of people through fuel price cuts, subsidies, free diagnostics and curative policies for those quarantined.

Shah of Kotak AMC says tax cuts and direct transfer schemes such as Pradhan Mantri Kisan Sanman Yojna will support consumers/daily wage earners who have been impacted by the coronavirus-led slowdown.