New Delhi: To achieve over 6 percent growth projected by the Economic Survey 2012-13 for the next financial year, fiscal consolidation and implementation of economic reforms, among other steps, are needed, industry said on Wednesday.
Appreciating the assessment made by the government in the Survey that economic slowdown is a wake-up call for stepping up reforms, industry said implementation of reforms is important in order to boost investor confidence and achieve economic growth rate of over 6 percent in 2013-14.
"The Survey's stress on fiscal consolidation through broadening the tax base and targeting wasteful and distortionary subsidies is welcome. We are optimistic that the Budget would incorporate these suggestions for kick starting the new growth cycle," CII President Adi Godrej said.
"The government should also address issues like widening fiscal deficit along with focusing more on reforms process which will help to boost investor confidence," CII Director General Chandrajit Banerjee said.
Assocham said the government needs to adopt a more serious approach towards major issues hindering the economic growth.
"Given the challenging internal and external conditions, revival of growth requires government initiative to announce a stimulus package. The growth prospects are affected due to poor show by manufacturing industry and agriculture sector," Assocham Secretary General D S Rawat said.
The pre-Budget Economic Survey tabled in Parliament today projected an optimistic 6.1 percent to 6.7 percent growth in the next fiscal taking into account normal monsoon, moderation in inflation rate and mild recovery in global growth.
In the current fiscal, the economy is projected to grow at 5 percent, the lowest in a decade.
Assocham said the government's public finances are already in bad shape. Therefore, it must seriously initiate reforms process that help remove infrastructure bottlenecks, bureaucratic delays, bring clarity to government policies as well as their effective implementation.
PHD Chamber said lower interest rates could act as a catalyst to boost business sentiments inducing investment in various critical sectors of the economy, going forward.
The chambers asked the government to identify a list of doable short-term policy interventions and ensure faster implementation of big-ticket projects.
The Economic Survey said efforts should be made to raise revenue by widening tax base and not by increasing rates is a welcome step, CII said.
Federation of Indian Export Organisations (FIEO) said trade deficit, which rose to 10 percent of GDP in 2012, from a level of 2.3 percent of GDP in 2004, is impacting the current account deficit (CAD) which in turn retarding industrial growth.
"Sustainable CAD is 2.3 percent of GDP whereas existing is 5.4 percent of GDP and is expected to go up which is a cause of concern particularly when there is a paradox of high CAD in a period of low growth," FIEO President M Rafeeque Ahmed said.
"CAD runs at a risk when investment is very low. Increasing investment is needed to boost growth..", he said.
Commenting on the Survey, Industrialist and Rajya Sabha MP Vijay Mallya said: "Government needs resources for social schemes such as subsidies. Government also needs to raise resources to offer subsidies. So it is a fine balance".
"If one sector gets subsidy then other sector has to contribute towards generating that subsidy. Government is not going to produce those resources magically," said Mallya, whose Kingfisher airlines is facing problems.
Supporting the government's move to contain gold imports, he said "these are measures which Finance Minister is considering but I think I will buy his point completely. There has to be a balance between revenue generation and revenue expenditure."
First Published: Wednesday, February 27, 2013, 18:17