According to the industry body, stalling of the growth process and policy inactions hurt the common people the most and what we lose in the process are valuable jobs and sources for generating income
 

Terming the economic situation as ‘grave’, industry body Federation of Indian Chambers of Commerce and Industry (FICCI) on Monday asked the Union government to go in for bold steps like allowing foreign direct investment (FDI) in multi-brand retail, cut interest rates and halt funding of welfare activities to revive growth, reports PTI.

“India is in the midst of a grave economic crisis. The combination of low growth, high inflation, high fiscal deficit and the highest ever trade account deficit has raised a lot of concern,” FICCI president RV Kanoria told reporters in the capital.

Suggesting a 12-point agenda, Mr Kanoria said during the time of low growth and global uncertainties, all the political parties should strengthen the hands of the policy makers.

“There has to be a clear recognition on the part of ruling and opposition parties that we are in crisis situation and all parties need to stand united and strengthen the hands of policy makers to take bold decisions and act pro-actively and decisively,” he added.

He said that reasons like excessive monetary tightening, delays and uncertainty over key economic legislations, projects delays on account of factors including stalled environmental clearances have pulled down the country’s economic growth.

India’s GDP (gross domestic product) growth has slumped to 6.5% in 2011-12, the lowest in the last nine years.

The chamber has suggested that the timely implementation of Goods and Services Tax (GST) would be a major landmark reform that could alter the dynamics of Indian industry and exports. “It would add 2% to our GDP. Tax administration and tax collection will also go up,” he said.

Besides, he asked for immediate easing of monetary policy and lowering interest rates by two percentage points and CRR by one percentage point. Cash Reserve Ratio (CRR) is the portion of deposits which banks are required to keep with the RBI.

“It is acknowledged that inflation in India is largely a supply side problem. To deal with such a problem using monetary tools may not be the right approach,” Mr Kanoria said.

He also asked to revisit the Land Acquisition Bill, as the bill restricts the use of irrigated multi-cropped land for infrastructure development.

He recommended providing fiscal stimulus for investments across sectors.

“The government must ensure that these proposals (allowing FDI in multi-brand retail and allowing foreign airlines to take stake in domestic carriers) reach their logical conclusion as both these measures would enhance overall growth in the economy,” the Ficci president added.

Mr Kanoria also asked the government to decontrol the prices of diesel and other oil products and “the government can also consider imposing a higher duty on imported diesel cars”.

Mr Kanoria said that repatriation of black money immediately could help in mitigating the balance of payment situation.

“The White Paper brought out by the government on the issue alludes to a scheme whereby some governments between themselves have entered into special administrative agreements for revenue sharing,” he said.

The government should urgently hold discussions on this subject and arrive at a methodology in a time bound manner to enter into similar agreements, he added.

Further, he said the government should “eschew the temptations of a premature welfare state and announce an immediate moratorium on any additional expenses on doles”.

The sums already allocated for welfare schemes should be distributed in an efficient manner as envisaged under the 'direct transfer of subsidies' programme linked to the Aadhaar platform, he said.

Mr Kanoria urged the RBI to cut repo rate by one percentage point in the forthcoming monetary policy review.

On Land Acquisition Bill, he said if the conditions in the Bill come into force “we will find it extremely difficult to achieve the targets that we have set for ourselves for investments in infrastructure and manufacturing. The consequent impact on job creation will be devastating”.

Besides, he said the slowdown in growth in investments is deeper in case of the private sector and this trend must be reversed.

“We urge the government to look at measures such as providing accelerated depreciation and scrapping MAT for infrastructure projects as all of these would give a fillip to investment activity,” he added.

Here is the 12-points agenda by FICCI for stimulating Indian economy's growth...