CII further urged for expansion in the Reserve Bank of India (RBI) balance sheet to meet the demand exigencies of the pandemic.
The Confederation of Indian Industry (CII) has called for a fiscal stimulus of Rs 3 lakh crore and government expenditure programme to boost demand in the Indian economy.
Addressing his first media interaction as CII president, TV Narendran, CEO and managing director of Tata Steel, said, “CII estimates that there is fiscal headroom of up to Rs 3 lakh crore and this amount can be channelised towards direct cash transfers to the vulnerable people, higher allocation for MNREGA, short-term GST rate cuts and lower excise duty on fuel.”
Demand can also be revitalised through a time bound tax concession of interest rate subvention for home buyers, a LTC cash voucher scheme as done last year and extending the Atmanirbhar Bharat Rozgar Yojana till 31 March 2022, he said.
Narendran pegged India’s GDP growth rate for 2021-22 at 9.5%. “Ultra-high frequency indicators strongly presage growth recovery following the second wave of the pandemic. With recent uptick in mobility indicators, traffic congestion index and daily railway passenger movement, we believe that 9.5% growth rate can be achieved this year,” he said.
He added that growth needs to pick up to 9% by 2024-25 with public expenditure, reforms and vaccination as key levers. “The cumulative impact of the two waves on incomes and consumer sentiment, coupled with the increase in household medical expenses in the second wave, is likely to affect consumer demand for some time. As the economy reopens post the second wave, a dual-pronged government strategy is required to boost consumption and support industry till demand is well-entrenched,” he said.
CII further urged for expansion in the Reserve Bank of India (RBI) balance sheet to meet the demand exigencies of the pandemic. Narendran also called for support to industry through increase in Emergency Credit Line Guarantee Scheme (ECLGS) to Rs 5 lakh crore along with extension of the scheme to March 31, 2022 and inclusion of more distressed sectors such as retail. He further suggested long pending structural tax reforms such as inclusion of ATF and other fuel products under GST to be considered.
Responding to a query on the state of private sector investments on capacity expansions, he said that it was a function of demand and profitability, which were both coming back. Giving the example of steel industry, he said, the companies in the sector have announced expansion plans of about Rs 50,000-60,000 crore over the next three years. “As more and more sectors come back and are able to capitalise on demand growth and margin expansion, you will see private sector investment coming back. Also, government’s move on PLI has been good. A lot of investments are coming in. FDI coming into country is $82-83 billion, and 50% of it is in electronics, computer, hardware related, which is also good. Also, Budget announcements on infrastructure spends will drive positive sentiment,” he said.
Further, CII suggested measures for accelerating vaccination. As per CII estimates, an average of about 71 lakh daily vaccinations are required over June to December 2021 to administer at least a single dose to all adults. For this, the vaccine availability must increase by 2 times. CII has also suggested a multi-pronged National Oxygen Development Plan to create a robust oxygen ecosystem.
Narendran also called for the appointment of an empowered minister of vaccination to accelerate the vaccination programme, including in rural areas, procurement and distribution of vaccines to states based on scientific criteria and monitoring progress through a daily dashboard.