CII calls for monetary stimulus to revive growth

The government has come under attack once again, this time from the industry body Confederation of Indian Industries. CNBC-TV18’s Appaji Reddem reports that the CII has come out with a list of steps the government must take to revive the economy...starting with snapping out of policy paralysis.

Adi Godrej, the President of the Confederation of Indian Industries, is not mincing his words. Stung by slowing growth, the CII is urging the government to come out of its comatoseness and take immediate steps on the monetary, fiscal and administrative front to fuel an economic revival.
"We do hear that some times they are facing some political obstacles but this is the time to show extraordinary leadership and overcome the political problems. It's also a time where we feel in our country whether our governments, business, opposition and state governments, not just union governments should come together to see to it that we overcome these difficulties," Godrej says. The list of steps that need to be taken immediately, to help industry, and boost the economy, include...

• A 100 basis point cut in repo-rate
• A 100 basis point cut in CRR
• Rationalization of petroleum prices and taxes
• Depreciation for investments in plant and machinery at 25 percent
• 25% weighted tax deduction on expenditure incurred by companies to "go green"

S Gopalakrishnan, the CII President Designate, says, “Perception may be worse than reality, but the current negative sentiment will only make matters worse. Positive action may change the sentiment to positive.”
The biggest worry, apart from infrastructure bottlenecks, issues with land acquisition, and environmental delays, is that there is no tangible action plan on fiscal consolidation.
“We need to see a revised and clear plan from the government on how fiscal consolidation would be achieved this year. A quick statement on this from Government would help confidence levels of investors,” says Sunil Kant Munjal
Chmn - Eco Policy Natl Committee, CII
But the biggest fiscal stimulus would come from movement on GST.
Adi Godrej says "GST is the biggest fiscal stimulus we can provide. Fiscal stimulus need necessarily be. GST, our indirect tax system will add tremendously add to growth of our country. So there are many areas where government can help incentivise investments etc.
CII also stresses on the need to intensify the fight against corruption.
The message from CII is clear. The current economic situation is not a repeat of 1991... nor is it as bad in India as in the rest of the world... but if these proposals are not acted upon, the chances of a quick revival in India go down drastically.