Putting more money in consumers’ pockets key to revive consumption: CII’s Sanjiv Bajaj

The president of Confederation of Indian Industry (CII) said on August 3 that putting more money in the pockets of consumers is of vital importance to revive consumption and support the economic recovery.

Sanjiv Bajaj, who is also the chairman and managing director at Bajaj Finserv, added that the government should contemplate a reduction in personal income tax rates in its next push for reform as this would increase disposable incomes and revive the demand cycle, according to a statement. Bajaj was addressing the media for the first time at Bangalore after taking over as president of the industry chamber.

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Bajaj also said that the country should boost its foreign exchange reserves in view of the capital outflows prompted by an uncertain global economic environment.

“For this, the government should work towards inclusion of some of the large market cap companies into the global equity indices like MSCI and FTSE indices; expedite India’s entry into J P Morgan’s Global Emerging-Market Bond Index and Barclays Global Bond Index; and consider bringing out a special issue of India Millennial Bonds like was done in 2008,” a CII statement said, citing Bajaj.

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He also suggested expanding production linked incentive schemes to more sectors within high labor needs and greater import potential, while also  seeking employment linked incentive schemes for the service sector. To start with, CII suggests instituting such schemes in tourism, logistics, retail and film, animation and gaming.

The industry body chief also sought that fuels and electricity duty should be brought under GST to make input tax credit available to industry.

It also sought reduction of import barriers, lower three-tiered tariff structure and more importance for services in free trade agreement negotiations.

India’s economic recovery faces headwinds from a likely global growth slowdown as well as domestic monetary tightening that is expected to continue for a few more months as inflation stays elevated.