?Dilute govt equity in PSUs, cut rates to spur growth?

The Assocham study on fiscal situation and the task of the new government has come out with three strategies to contain fiscal deficit and generate resources for infrastructure development through dilution of government equity in profit making PSU?s, maintaining status quo in existing low tax regime and further relaxing interest rates to avoid constraints on growth momentum.

Assocham urged the finance minister to roll out a stable interest rate policy, supportive for short and long-term investments to avoid interest shocks and constraints on economic growth. At the release of the study, Assocham president & MD, JSW Steel, Sajjan Jindal said, ?To keep the momentum of growth alive, it?s important that the government maintain current low tax slabs with higher compliance.?

Emphasising on the execution of goods and service tax, the Assocham chief said a roadmap for it is necessary to usher India into a single GST regime. Jindal said that low tax regime on indirect taxes front currently in practice, requires to be sustained with emphasis on higher compliance. This will enable government to earn more for its kitty and spend part of it in creation of social infrastructure.

?The GST regime should be implemented by April 1, 2010 ,? said Jindal.

Moreover, the Assocham report also states that it is preferable to dilute government equity in leading PSUs.

?Dilution of government equity in leading profit making PSU?s alone could fetch at least Rs.80, 000 crore,? said Jindal.

According to the chamber even a 10% dilution in the PSU giants could fetch Rs. 60,000 crore and a 20% dilution would still leave the government in control of these PSUs. NTPC alone could fetch Rs. 68,000 crore if the government stake is reduced from 89.5 % to 51%. The four power sector giants could give Rs. 98,000 crores.

Moreover the report also states that the government should allow more FDIs and adapt PPP models for infrastructure development.

According to Jindal India also needs to tap 100 billion dollar soft lending facility, proposed to be created by World Bank under provisions of recent G-20 meet in London to garner funds to uplift its infrastructure for investments and employment creation.

According to Assocham it?s important for the government to plan a roadmap of how to tackle the deficit in next 5 years.

?The government to plan a road map going ahead. However, we feel that it is possible to get 10% growth by 2012,? said Jindal.