Assocham seeks sops from government to revive sectors in 'crisis'

NEW DELHI: Pointing out that sectors like real estate, power, steel, gems and jewellery are in a "real crisis", industry body Assocham has approached the government for incentives like a cut in excise duty, teaser loans for housing and interest subvention for exporters.

It added that RBI, banks, states and the Centre should move fast to rescue the troubled power distribution companies (discoms), else they would become dead assets and become a big drag on the exchequer, pushing up bad loans.

"Between September 2014 and August 2015, while the repo rate got reduced by 75 basis points (before the latest 50 bps cut), the banks' weighted average lending rate was marginally brought down to 11.93 per cent.

"Certainly, the banks did not help the situation and some of these core employment-generating industries slipped further into trouble because of lack of consumer demand, high interest costs and cheap imports," the chamber said.

"For creating additional demand, the government will have to chip in with rather bold measures and create extra elbowroom for select industries by extending short-term stimulus on construction materials like steel, cement, power equipment while for gems and jewellery, export sops like interest subvention must be seriously considered," Assocham Secretary General D S Rawat said.

He termed the assumption erroneous that the special dispensation would create a hole in the government's fiscal purse.

On the contrary, extra demand would mean more tax collection and increased revenue while creating an overall positive atmosphere, he added.