Creation of common policies and taxation system essential for sustainable and inclusive regional growth - CII
"Speedy and effective implementation of the projects particularly in the infrastructure sector, with due consideration to environment is the need of the hour and also the key to achieve higher economic and inclusive growth", emphasized Dr C Rangarajan, Chairman, Economic Advisory Council to the Prime Minister while addressing the Conference on 'Reviving Growth in North', organized by Confederation of Indian Industry (CII) Northern Region."Various procedural and other bottlenecks relating to the mega infrastructure projects, key Industrial and freight Corridors etc need to be removed on priority basis to give a fillip to the growth in the region", he added.
Dr Rangarajan further informed that In addition to the continuation of fiscal consolidation initiatives, the basic principle of reforms must also be applied to all key sectors of the economy and all possible policy or other bottlenecks, causing delay in completion of projects should be analyzed and sorted out on top priority. This is critical to enhance India's image as an attractive investment destination.
There is a need to prioritize the spending on subsidies and subsequently I hope we would be able to bring the subsidy spending down to 1.6% from current 2.2 % of the GDP. Critical sectors like food security do demand subsidies, but it can be withdrawn from other sectors like Petroleum etc to bring about a balance, he highlighted.
Stressing on the need to improve governance, he called upon the Governments ( both state & centre) to enhance their delivery systems so that all measures actually reach the needy effecivley.
The growth rate would be around 5.5 % in the last fiscal which would enable us to achieve our projected rate of 4.9 % for the present year. For the next year, I expect the growth rate to pick up to 5.5 - 6 % backed by sound growth in agri, services & infra sectors, informed Dr Rangarajan.
Calling upon CII members to enhance their productivity levels, Dr Rangarajan highlighted that The investment rate at 30.4 % still remains sufficient, but we need to focus strongly upon the productivity and returns on investments to enhance Incremental Capital Ratio. For this, we should invest more in technology up gradation, modern infrastructure and adoption of latest mechanisms & processes to get the maximum returns of whatever Investments we have.
Highlighting some of the sectoral issues, he stressed that We have some constraints in Power sector due to lack of supply of coal; agri, manufacturing, infra etc which need to be sorted out immediately. Power is indeed the backbone of growth, so we need to further build on our power generation capacities in order to fuel growth. Industry can in no way run without power and without industrial growth, there can be no inclusive or equitable growth because it is industry that generates huge employment.
On other reforms like Land Legislation and labour reforms, he shared that There is a need to get all stakeholders together and build a consensus on these issues and only then, the government can decide further.
Mr D K Joshi, Chief Economist, CRISIL shared that Power, Land and labour reforms are the core of the problem for north. Various procedural bottlenecks need to be removed both at the central and state level. Issues like interest rates, fiscal policy and political stability need to be addressed at the national level, however, issues like land prices, labour and power reforms can be taken care of at State level for better results.
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