Tags:
Journalism of Courage
Leaders of Indian industry in their meeting with PMEAC Chairman C Rangarajan today pressed for an economic revival package,expeditious reforms and cut in interest rates to arrest slowdown.
Representatives of the three apex chambers CII,Assocham and PHDCCI also raised the issues of high interest rates,liberalisation of FDI regime and implementation of the Goods and Service Tax (GST) regime.
“…there is an urgent need to create conditions for revival of private investment by…further reduction in repo (short-term lending) rate by 100 basis points,and reduction of Cash Reserve Ratio (CRR) by 100 basis points”,CII President Adi Godrej told reporters after the meeting .
The Reserve Bank,which opted for status quo in its last policy last month,is scheduled to review the monetary policy on July 31.
Rangarajan,himself a former RBI governor,and key aide of Prime Minister Manmohan Singh met the industry chambers to help the Government firm up steps to boost growth.
As the Prime Minister himself had assumed the charge of Finance Ministry following exit of Pranab Mukherjee,the onus of taking initiatives to arrest falling growth will be on the Prime Minister.
Godrej demanded that government should work out an economic revival package in consultation with the RBI to arrest falling GDP growth which slipped to nine-year low of 6.5 per cent in 2011-12.
According to Assocham President Rajkumar Dhoot,”The process reforms are significant…to address the current challenges faced by the Indian economy and must be fast-tracked.”
These,he added,were also necessary to boost growth of manufacturing sector which dwindled to a low of 5.3 per cent in the last quarter of the previous fiscal.
“Fall in the GDP growth to 6.5 per cent during 2011-12 from 8.4 per cent in the previous year is one concern,but an acute fall in quarterly growth rates to a level of 5.3 per cent which is the lowest quarterly growth rate in past seven years,reflects the actual magnitude of this issue,” said Dhoot,who is also a Member of Parliament.
All the aspects of a policy processes,he added,must be dealt through a single window and administrative processes involved in the implementation of government policies should be simplified with a view to reducing compliance burden.
Management of the domestic economy,according to Dhoot,”is a bigger cause of concern at the moment as an uncertain global situation together with rising risk aversion and slowing capital inflows are posing grave challenges to India’s growth and balance of payments outlook.”
The domestic business entities,he added,seems to be in a fix with regards to both continuation and further expansion of their activities.
Limited scope for fiscal stimulus: Rangarajan
Amid India Inc demand of booster dose,PMEAC Chairman C Rangarajan today said the scope for fiscal stimulus is limited in view of high deficit.
“We must reallocate expenditure in such a way that there is emphasis on capacity creation,there is emphasis on capital formation. Therefore,the direct answer is that the kind of stimulus that we provided in 2008,scope for that is not available,” he said on the sidelines of an event organised by National Housing Bank here.
“We have to make an effort to contain fiscal deficit at the budgeted level. That itself is a very big task. Therefore,we need to look at govt expenditure,” Prime Minister’s Economic Advisory Council (PMEAC) chief said.
After overshooting fiscalTCN deficit target by over 1 per cent in 2010-11,the government pegged the target for current fiscal at 5.1 per cent of the GDP.
Lower tax revenues and poor disinvestment receipts pushed up the government’s fiscal deficit for 2011-12 to 5.9 per cent of the GDP,as against the target of 4.6 per cent.
The government had provided stimulus package worth Rs 1.86 lakh crore in 2008-09 to spur growth in the wake of economic slowdown.
Meanwhile,the industry chambers in its meeting with PMEAC requested that government in close coordination with RBI should announce economic revival package.
Besides,they have also suggested there is an urgent need to create conditions for revival of private investment by …further reduction in repo (short-term lending) rate and Cash Reserve Ratio (CRR) by 100 basis points (1 per cent) each to boost the economy.
