RAI urges govt to inject capital into retail industry amid pandemic

New Delhi, May 13 (KNN) Retailers Association of India (RAI) has urged the government to inject capital into the retail industry as, it is getting increasingly difficult for retailers to retain employees and to keep their businesses afloat.

Speaking about the state of the Indian Retail Industry, Kumar Rajagopalan, CEO, 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."

''The two most important and immediate steps that can prevent this industry from collapsing are to prioritize vaccination of the Last Mile Workers (LMW) and to urgently provide financial support measures,'' he added. 

RAI estimated that each LMW meets about 50 to 100 customers per day. Thus about 100 employees are then likely to come in contact with an estimated 7000 citizens a day.

The retailer's body further said that retailers need to pay salaries, minimum electricity, rentals, property taxes etc, even if the businesses are shut due to the lockdown adding, ''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 added.

In this regard, 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 second wave of COVID-19.

RAI said 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 added.

It also 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.