Government should inject Rs 1,00,000 crore and reduce Cash Reserve Ratio and repo rate in order to infuse liquidity in the economy and ensure that India remains insulated from the global financial meltdown, apex industry bodies said.
As part of a confidence-boosting package for the industry, Ficci asked the government and RBI to immediately consider reduction in CRR and repo rate by 100 and 150 basis points, respectively, over the next three months.
Measures such as easing of registration norms, relook at the Participatory Notes (PN) policy and further increase in the limit on investments in the corporate debt market would ease FII inflows in the market, it said.
Assocham has appealed to Prime Minister Manmohan Singh to immediately take bold measures by injecting Rs 1,00,000 crore liquidity in the economy.
In its message, it said that foreign institutional investors should be encouraged to invest in Indian corporate bonds beyond the current limit to an extent of $10 billion with a lock-in of inflows for one year.
CII demanded further easing of the external commercial borrowings (ECB) norms and removal of the interest rate cap on Non Resident Indian Deposits.
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"While the recent relaxations of ECB guidelines for companies in the infrastructure sector are welcome, the government must allow all companies that are investing in new capacities to access foreign debt," it added.
All projects with cost in excess of $500 million should be allowed to borrow up to $150 million for meeting rupee capital expenditure, it said.
It has further recommended setting up of an exclusive fund for creating liquidity in the capital market.