Amidst concerns over slowdown in growth due to the transient disruptions in the economy following the implementation of the Goods and Services Tax (GST)and the remaining over-hang of demonetisation, India Inc is looking up to the government to take a few 'out of ordinary' steps like relaxation of the fiscal deficit targets and increase in public spending to boost investment -led growth that would lead to more jobs and revival in consumer demand, the ASSOCHAM said in its recommendations to the government.
Ahead of the credit policy review on October 4, the chamber also wrote to the Reserve Bank of India (RBI) and the Monetary Policy Committee to cut the interest rates at least by 25 basis points, given the challenges being faced by the economy which needs immediate measures for revival of growth.
"At least 50 basis points elbow room can be taken with regard to 3.2 per cent fiscal deficit for the current year and the next financial year. The fiscal targets can be taken to 3.7 per cent, but with a strict oversight over quality of expenditure so that the extra resources are wisely spent in building and reviving investment in infrastructure sectors like roads, power, railways, ports," said D S Rawat, ASSOCHAM Secretary General.
Further, Rawat said the situation requires immediate intervention of the government so that any disruptive impact of the GST is minimized. In view of the difficulties being faced by the small and medium sized traders in filing of returns, ways must be found to reduce the compliance cost for the trade, which, he said, can be deliberated at the forthcoming meeting of the GST Council.
In its letter to RBI Governor Dr Urjit Patel, the ASSOCHAM Secretary General said the "economy is facing multiple challenges as growth is slowing down and investment is not picking up. Consumers have cut down on spending and businesses have also lost momentum."
Stressing that the rupee is still over-valued, the chamber said "effective exchange rate of rupee has appreciated against trading partners. This has an adverse impact on exports .RBI should be persuaded to target the real effective exchange rate more effectively".
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Besides, the problems being faced by the exporters arising out of GST implementation should be addressed to without loss of time.
"Exports picked up in August and we need to maintain and build the momentum," the chamber said.