While presenting the suggestive roadmap for revitalizing economic growth to the government, PHDCCI suggests liquidity infusion, job creation and low cost export finance would be crucial at this juncture to revitalize the economy and accelerate it to a higher growth trajectory.
In a statement on Wednesday Rajeev Talwar, President, PHD Chamber of Commerce and Industry said that the Government has fostered a dynamic economic environment in the last five years with implementation of various praiseworthy economic reforms, and India has increased its presence significantly in the world economic system.
Going ahead, the government must expedite liquidity infusion through gradual reduction in CRR from the current level of 4% to 2% and reduction in SLR from 19% to 15%, said Talwar.
“We appreciate the recent cut in repo rate by 25 bps and expect that the repo rate would be reduced by 125 bps gradually from the current level of 5.75% to 4.5% in the coming quarters,” added Talwar.
The transmission of the policy rate cut by the banking sector in terms of reduced lending rates would be crucial to boost liquidity and induce demand in the country, Rajeev Talwar said.
He said that there is a need to push NPA resolution timely to bring back liquidity in the system. Creation of jobs in the economy would require structural reforms in the labour laws. The low hanging fruit at this juncture is to promote labour intensive manufacturing by enacting law for fixed term employment in all sectors and making the labour laws simpler by converting 44 Labour Laws into 4 Labour Codes, said Rajeev Talwar.
He further elaborated that the GST on Tourism facilities must be charged at fresh rates of 5% for accommodation upto Rs. 15,000/- and 12% above Rs. 15,000/- to bring in investments and create jobs in Hotels, Restaurants, Airlines, Railways, Road Transport as well as Travel Agents, suggests Rajeev Talwar.
There is a need to insulate the economy from global headwinds and at the same time seize the global opportunity by enhancing low cost trade finance, said Talwar.
“Support should be extended to exporters by providing export credit at LIBOR 1% using US$100 billion of forex reserves as a revolving fund,” he said.
He said the cost of doing business must be reduced by reducing the cost of capital for business.
Impetus should be given to boost the export of surpluses to earn economic value of produced goods thereby facilitating capacity utilization and improving trade balance, added Rajeev Talwar.
The exports logistics infrastructure must be improved and bottlenecks at ports must be removed to reduce transaction costs and improve ease of doing business for industry.
One of the major engines of economic growth is increasing private investments. There is need to step up government spending to stimulate investments in the country, Rajeev Talwar. For attracting domestic and foreign investors in the country, an enabling business environment must be created, he added.
The Companies Act must be reformed to make it more industry friendly by reverting all penalties to Civil Laws instead of the current prosecution provisions even for minor infractions, said Talwar.
MSMEs should be exempted from the prosecution provisions for minor infractions in Companies Act, said Talwar.
There is a need to undertake a programme of elevated National Highways to boost investments in assets, employment and industries rather than opt for the acquisition of land, he said.
Creation of demand should also be a priority of the government to revitalize economic growth. The disposable income of people must be enhanced by reforming the direct tax structure. Rural demand must be tapped by promoting rural entrepreneurship, said Talwar.
The maximum personal income tax rate should move towards 25% to increase the personal disposable income, which will boost demand in the economy, he said
There is a need to index all the measures taken by the Vajpayee Government for promotion of Housing, Real Estate and Construction to boost demand and create jobs in the economy, said Rajeev Talwar.
The agriculture sector must be supported by digitizing land records and also by providing low cost credit to farmers to enable them to undertake agricultural activities, Talwar said.
Wastages must be reduced from the current level of more than 30% to less than 10% by augmenting storage capacities, modernizing/ upgrading godowns. This would enhance the income of farmers, added Talwar.
Subsidies on electricity, fertilisers, etc. should be provided by the way of direct transfer to reduce wastages in the transfer of subsidies, said Rajeev Talwar
Further, one (1) lakh check-dams must be created to facilitate irrigation systems in the agriculture sector as check-dams are found to be very beneficial in areas where there is poor rainfall and lack of perennial sources of water.
“We look forward to effective reforms in the coming times with economic prosperity and jobs for all,” said Talwar.
PHD Chamber envisages a New India where the economy will be in double digit growth trajectory, the manufacturing sector will be globally competitive, the agriculture sector will be sufficient to sustain the rising population and millions of jobs will be created for socio-economic development of the nation, opined Rajeev Talwar.
Income levels of the people will be growing exponentially, farmers’ income will be doubled, taxation system will be simple and ease of doing business will become a reality in the New India envisaged by the Prime Minister, he said
New India will be the ‘dream’ India which will provide housing for all, education for all, easy access to medical and health facilities as well as better standards of living to all the people.