CII’s new president: Govt must relook tax provisions

RBI needs to cut interest rates by 100 basis points by December 2012

Written by ENS Economic Bureau | New Delhi | Published: April 20, 2012 12:50 am

The Confederation of Indian Industries (CII) has requested Prime Minister Manmohan Singh to fast-track pending reforms as it would help improve investor sentiment and revive economic growth. In this regard,the government must re-look tax provisions such as retrospective amendments and GAAR,while the central bank should ease monetary stance further.

“We met the Prime Minister yesterday and discussed with him about taking the reforms process forward. This will help in improving perception about India’s image. Our perception is worse than reality. We need to improve both,” CII’s incoming president Adi Godrej and chairman of Godrej Group said on Thursday.

As many as 68 amendment Bills in critical areas such as real estate and financial sector are yet to be cleared by Parliament,Godrej pointed out.

“Given the current status of the economy,we have ahead of us the Herculean task of reviving economic growth to the pre-crisis level of over 9 per cent. This needs structural reforms both at the central as well as the state level,” he said.

Godrej,who succeeds Tata Steel Managing Director B Muthuraman as CII president,also pointed out that retrospective tax amendments such as the Budget proposal to tax Vodafone-like deals would impact investor perception.

“It is very clear that retrospective amendments create a very negative sentiment on investments in India. In critical times like now,this would be best avoided,” he said.

In order to revive investment sentiment,the RBI needs to cut interest rates by 100 basis points by December 2012. “After a gap of three years,the Reserve Bank slashed the short-term lending rate (repo) by 0.50 per cent to 8 per cent,” he said.

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