More manufacturing jobs, land and labour reforms including national employment policy, new industrial policy, direct tax code, lower corporate tax and a reasonable control on fiscal deficit formed part of the measures outlined by industry body CII as ‘100 days agenda for the government’.
Industry leaders from CII pointed to the growth slowdown in the economy, pegging this year’s GDP at 7-7.4 per cent. For GDP to grow at 10 per cent by 2023-24, the total investment requirement is estimated at $5.74 trillion for the next five years, CII President Vikram Kirloskar told reporters. Of this, the total investment required for infrastructure sector is estimated at $1.18 trillion for the next five years, while for non-infrastructure including agriculture and industry to be $4.56 trillion, he said.
He said the private sector is facing difficulty in getting land for manufacturing units and the states have a huge role to play and there is a need to create land banks. On labour reforms, he suggested for the formulation of national employment policy and encourage states to provide fixed-term employment besides incentivising companies for creating employment. Also, the government needs to bring in Direct Taxes Code (DTC) and the last leg of reforms in the GST. India’s economic growth in the January-March quarter of 2018-19 slowed to a 20-quarter low of 5.8 per cent due to the poor performance of agriculture and manufacturing sectors. “Consumption will be greatly encouraged by reducing the personal income tax burden, adding more disposable income for consumers,” he said, adding that various government initiatives including PM KISAN to double the farmers’ income by 2022 will help drive rural consumption and generate demand.
To boost consumption, CII also proposed a reduction in Personal Income Tax, rationalise taxes on equity capital and addressed delayed payments emanating from the public sector.
Commenting on rationalisation of taxes on equity, CII president-elect Uday Kotak said that equity is costlier than the debt due to the imposition of various taxes. On concerns over shortage of liquidity, Kotak said it is available but at a higher cost so there is a need to increase the quantum and also ensure avoiding distortion or crowding out. “In the last 24 months, the big success area of this govt has been the small saving schemes. A very large amount of money has moved into small savings which are financing the fiscal deficit. In most of these schemes, rates are higher than 8 per cent. However, bank deposits competing for financial saving provides 7-7.4 per cent,” he said.
The ability of banks to drop deposit rates are linked to the interest rate offered by sovereign schemes, he said, adding there is a need to move towards more linear and balanced financial savings across the economy that will make the price of the money more attractive for users which effectively can give a boost to consumption.
With regard to fiscal deficit, Kotak said it is an important number and there is a need to ensure a reasonable control on it.
Elaborating on improving employment in the country, he suggested a triple-pronged approach for job creation, relating to employment intensive sectors, skilling, and labour reforms for enterprise creation.
He placed a strong emphasis on accelerating growth in job-creating sectors such as construction, hospitality, logistics, healthcare, and the financial sector, among others. According to CII, construction and healthcare alone can create 20 million jobs in the next five years.
On the US decision to withdraw export incentives from India, Kirloskar said the decision has been taken in a “haste” and would hurt domestic exporters, expressing hope that both the countries would find an amicable solution.