India Inc seeks economic revival package

NEW DELHI: India Inc has asked the government for measures to revive the economy, suggesting dual pricing of diesel, FDI in multi-brand retail and civil aviation, further reduction in repo rate by 100 basis points and cash reserve ratio.

Leading industry chambers CII, Assocham, South Indian chamber of Commerce and PHDCCI met Prime Minister’s key economic aide C Rangarajan on Monday to present their demands.

"Our economy is fast veering towards the grim situation experienced during the global economic crisis of 2008-09...The macro economic conditions are worsening at a faster pace than anticipated and we need to stem this at this stage," said Adi Godrej, President, CII at the meeting called by the Prime Minister’s Economic Advisory Council to get industry’s views on economic outlook for 2012.

India’s GDP growth fell to 6.5% during 2011-12 but the fourth quarter growth rate dropped to5.3%, slowest in past nine years. Revival of the economy and the industrial sector would hinge on putting in place a coordinated fiscal, monetary and administrative response that would ease the supply constraints and revive investment demand in the economy, industry leaders said.

Industry’s wish list includes discipline in government expenditure, expeditious implementation of the proposed goods and services tax, issue of bonds such as Resurgent India Bonds to non-residents, and direct access to oil companies to meet their foreign exchange requirements directly from the RBI.
"The process reforms are as significant as the second generation reforms to address the current prominent challenges faced by the Indian economy and must be fast-tracked," said Rajkumar Dhoot, president, Assocham.

Business confidence is low in the Indian corporate sector in the wake of subdued domestic consumption, rising costs of inputs, deceleration in exports and constant risks from unhedged foreign currency, Dhoot added.

Besides Godrej and Dhoot, the meeting was attended by industrialists including Vikram Kirloskar, Ajay Sriram, Sandip Somany and Sushma Berlia. Industry chambers told the council that it was imperative measures to improve the business confidence and to help address the widening current account deficit and falling rupee are implemented.

"The monetary tightening measures used to control inflation had hardened interest rates and investments have been impacted in a very big way. While it is clear that inflation has been a result of supply bottlenecks, there is an urgent need to create conditions for revival of private investment," CII said.