India in midst of economic crisis: FICCI
5 Jun 2012 2:18 AM GMT
Terming the economic situation as ‘grave’, industry body FICCI on Monday asked the government to go in for bold steps like allowing FDI in multi-brand retail, cut in interest rates and halt funding of welfare activities to revive growth.
‘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 R V Kanoria said.
Suggesting a 12-point agenda, 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 growth has slumped to 6.5 per cent in 2011-12, the lowest in the last nine years.
The chamber has suggested that the timely implementation of Goods and Services Tax would be a major landmark reform that could alter the dynamics of Indian industry and exports. ‘It would add 2 per cent in our GDP. Tax administration and tax collection will also go up,’ he said.
Besides, he asked for immediate easing of monetary policy and bring down interest rates by 2 percentage points and CRR by 1 percentage point. Cash Reserve Ratio 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,’ he said.
He also asked to revisit the Land Acquisition Bill, as the bill restricts the use of irrigated multi-cropped land for infrastructure development.
‘The government must ensure that [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,’ Kanoria added.
‘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 R V Kanoria said.
Suggesting a 12-point agenda, 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 growth has slumped to 6.5 per cent in 2011-12, the lowest in the last nine years.
The chamber has suggested that the timely implementation of Goods and Services Tax would be a major landmark reform that could alter the dynamics of Indian industry and exports. ‘It would add 2 per cent in our GDP. Tax administration and tax collection will also go up,’ he said.
Besides, he asked for immediate easing of monetary policy and bring down interest rates by 2 percentage points and CRR by 1 percentage point. Cash Reserve Ratio 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,’ he said.
He also asked to revisit the Land Acquisition Bill, as the bill restricts the use of irrigated multi-cropped land for infrastructure development.
‘The government must ensure that [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,’ Kanoria added.
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