India Inc seeks interest rate cuts

Written by fe Bureau | New Delhi | Updated: May 30 2009, 06:21am hrs
Even as several newly appointed ministersheaded to their offices to assume charge of their responsibilities on Friday, India Inc presented a 100 day action agenda for the new government with industry bodies Confederation of Indian Industry (CII) and Federation of Indian Chambers of Commerce and Industry (Ficci) asking for a cut in the interest rates to spur the sagging economy.

According to CII, the interest rates in India still remain high compared to many other economies. With inflation coming down, there is no reason to keep the key policy rates high and the key policy rates should be cut by at least 50 basis points, said Venu Srinivasan, president, CII.

CII's key recommendations include monetisation of fiscal deficit and reducing interest rates to counter large government borrowings which it feels are negating efforts of RBI. It is imperative that the government takes concrete steps in strengthening policies that will promote employment and growth across key sectors along with driving investment in infrastructure and manufacturing, said Srinivasan. The chamber recommends quick disinvestment of profit-making PSUs to immediately help soften interest rates and assist fiscal management. A key suggestion to fast-track projects such as NHDP, dedicated freight corridors, ports and airports is a single window agency. Low-cost housing and urban infrastructure under JNNURM are other top priorities for expenditure and action. The paper urges the government to promote public-private partnership in infrastructure by easing norms and financing mechanisms. It also moots the establishment of land bank corporations to acquire non-cultivable land to ease land acquisition.

CII has strongly recommended the introduction of goods and services tax of 12% by April 2010. It has urged the government to grant infrastructure status to healthcare and tourism and industry status to the retail sector. CII has recommendedthat public expenditure on health be increased from0.9% of GDP to 3% of the GDP. Ficci has reiterated the pressing need to pass the pending bills like the Pension Fund Regulatory and Development Authority Bill, the Banking Regulation Bill, the Forward Contracts Amendment Bill, the Drugs Repeal Bill and the Compensatory Afforestation Fund Bill.