Welcoming the Interim Budget 2009-10, the Confederation of Indian Industry (CII) said it was along expected lines in a press release issued here today.
CII also welcomed the increase in budgetary allocation to the Government’s flagship programmes such as NREGS, Bharat Nirman and JNNURM.
“CII is keen to see an increase in the funds flowing into infrastructure projects and the social sector. While the former will have a multiplier effect on the economy, the latter will put money into the hands of the people. Both are required to help the economy get out of the current economic stagnation,” said Venu Srinivasan, President-designate, CII.
The two stimulus packages announced so far have addressed critical areas of weaknesses in the economy such as housing, SMEs and exports.
As a result of increased spending and the slowdown in revenue collection, the fiscal and revenue deficits have turned out to be much higher than budgeted.
According to the CII release, the doubling of the fiscal deficit from 3.0% of GDP in 2007-08 to 6.0% this year should be seen in the context of the global economic crisis, which calls for extra-ordinary measures.
Fiscal expansion is being used all over the world as a counter-cyclical measure. For these measures to be effective, the RBI should follow it up with further monetary easing in the form of an interest rate reduction, said Srinivasan.
CII would like to welcome the extension of the interest subvention on pre and post shipment credit to exporters. Given the difficulties being faced by exporters in getting credit at a reasonable cost, this is a timely measure.
Another measure welcomed by CII is the attempt to ensure better delivery of social sector schemes through the allocation of Unique Identities.
“This is a long pending reform that will help target the beneficiaries of these schemes and prevent misuse”, said Srinivasan.