CII to continue its thrust on economy, infrastructure and good corporate governance: Venu Srinivasan, CII President
“The focus areas of CII would be on revival of economy, fast tracking infrastructure and improved Governance in addition to India@75”, emphasized Mr. Venu Srinivasan, President, Confederation of Indian Industry (CII) at a press meet in Mumbai today. Mr. Srinivasan was addressing the members and media on CII’s theme for the year 2009-10. He said that strenuous efforts were called for from all stakeholders and assured that CII would take measures with the government to eliminate policy roadblocks to economic revival. Focusing on building the transport networks, power and industrial regions, Indian infrastructure can be developed to achieve maximum efficiency. “Corporate governance needs to be instilled in enterprises at an early stage of their development. There is need to work with promoters and first-time entrepreneurs to encourage and support their initiatives in governance”, stressed the CII President.
The global economy is expected to bottom out in 2009 and revive in 2010 according to IMF’s World Economic Outlook; January 2009 with India expected to register 6.5% growth in 2010. The GDP growth registered a decline to 5.3% during the third quarter of the current year, 2008-09 with agriculture and manufacturing registering a negative growth. “The decline in growth in manufacturing is a cause for concern that we have been flagging for some time now due to its multiplier effects on the growth of services sector”, said Mr. Srinivasan.
There is a greater need to foster the economic growth by augmenting investments particularly in infrastructure. According to CII, this would create demand stimulus for sectors such as steel, cement and construction services and provide large scale employment especially to unskilled and semi-skilled workers.
According to Mr. Srinivasan, though the government has come out with various fiscal and monetary measures for economic revival, it is agreed that any stimulus to the economy would have to come only from within. From that point of view, there is merit in looking at another round of fiscal plus monetary measures. Putting across CII’s views, Mr. Srinivasan stated that rationalising indirect tax liabilities, cut in personal income tax, cut in interest rates for export credit, legitimate anti dumping duties and movement on disinvestments should be resorted to.
On the monetary side, CII suggests that the RBI cut rates by 50 bps for repo and reverse repo. Also, since currently the bond yield is artificially high, CII suggests that monetizing the deficit is the best option in the current circumstances.
Talking about unified goods and services tax, which is proposed to be introduced by the government on April 1, 2010, Mr. Srinivasan said that CII would like an announcement on the detailed road map and framework of the GST that would be brought in. “CII would like to see GST at a single rate.
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He apprised the audience that CII had already made detailed representation on GST to the relevant authorities and hoped to continue to work with the Group of Empowered Finance Ministers and the Finance Commission to ensure that a practical and useful tax framework is brought in.
Speaking on one of the most significant subjects of financial inclusion, Mr. Srinivasan urged a change in approach of the financial institutions and government. “Financial services providers should view a large number of excluded households as an “opportunity, not an obligation” and work towards developing low cost innovative business models that address the unique requirements of these customers. The government including regulators should consider adopting a more facilitative approach that promotes collaboration, innovation and experimentation while ensuring that key systemic risks are not compromised” said the Speaker.
Addressing the secondary market reforms, Mr. Srinivasan said that in the interest of building a healthy corporate bond market, appropriate policy reforms should be introduced at the earliest so that the private placement mechanism becomes the last choice for bond issuers.He also said that through its Capital Markets Committee and the Task Force on Financial Sector Reforms, CII would be actively pursuing reforms for a vibrant corporate debt market with SEBI, RBI and the Government.
Commenting on policy reforms in agriculture, CII would like a move from subsidies to investments with greater linkage between farm and markets. Further, investments in rural infrastructure including irrigation, storage facilities, cold chains and rural roads would go a long way in addressing the structural deficiencies in agriculture sector. “We need to address structural deficiencies in agricultural area”, stressed Mr. Srinivasan.
CII would work towards increasing financial inclusion as it has a multiplier effect on India’s broader society and economy. Manufacturing, another significant sector of Indian economy needs major reforms in terms of policies and procedures maintained the CII President.
Focusing on another thrust area of infrastructure, Mr. Srinivasan reiterated that the need of the hour is to have transparent and fair land laws in infrastructure, build adequate infrastructure for urbanisation and develop low cost housing among others.
Addressing the need for good corporate governance, Mr. Srinivasan said that CII would take active measures and support capacity building rather than increasing rules and regulations in governance.