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Journalism of Courage
Corporate leaders on Monday urged the government to reduce the cost of credit and spur flagging investment,which contributed to disappointing figures for economic growth in the three months to September.
Commerce and Industry Minister Anand Sharma met heads of corporates and officials from the Federation of Indian Chambers of Commerce and Industry (Ficci) a week after government figures showed a 25.5 per cent fall in capital goods output,a measure of investment,in October from a year earlier.
The economy grew 6.9 per cent in the second quarter from twelve months earlier.
Sharma told reporters: The decline in production figures,particularly in manufacturing,and investment have been causes of concern. Industries have raised (their worries over) the cost of credit.
Ficci called for a reduction in interest rates by 200 basis points till April 2012.
The corporate lobby also asked the government to restore depreciation rates for production plants and general machinery from 15 per cent to 25 per cent,their level two years earlier. The higher depreciation rates would help businesses save tax and incentivise investment.
Sharma said: There are decisions on credit availability and disbursement that banks in India and abroad will have to make. He also said the government needed to attract more foreign direct investment in core industries and infrastructure to increase the pace at which the country closed bottlenecks in the sectors in response to a plea for quick financial closure of five to six mega infrastructure projects.
Sunil Munjal,managing director of Hero MotoCorp,said quickly putting in place a uniform goods and services tax (GST),stalled by political difference between the central and some state governments,would help businesses and the government alike.
If we can bring GST,that would help revenue collection and streamline the system for trade and industry, he said.
However,the Ministry of Commerce & Industry may have to rely on approvals from North Block to move on many of the suggestions that entail funds from the treasury. Interest rate reductions fall under the remit of the Reserve Bank of India.
Chetan Bijesure,a Ficci expert on manufacturing,acknowledged that budget constraints might make the government unable to repeat its large increases in spending in the wake of the fall of Lehman Brothers in September 2008.
It is difficult for the government because it doesnt have much fiscal space, he said.
