The Hindu Business Line : Chambers seek policy rate cuts, divestment

New Delhi, May 29 Industry chambers have called for policy rate cuts, a partial monetisation of fiscal deficit, besides a further disinvestment in public sector undertakings in their recommendations to the new Government.

They have also asked for incentives for medium and small manufacturing enterprises (MSMEs) which include priority sector lending and a reduction in subsidies and other measures.

Mr Venu Srinivasan, President, Confederation of Indian Industry (CII), suggested a reduction in repo and reverse repo rates by around 50 basis points to 4.25 per cent and 2.75 per cent respectively. “We need investments in the infrastructure sector mostly,” said Mr Srinivasan.

He called for an increase in infrastructure spending to 11 per cent from the current 4 per cent by 2012 and that it should be directly monitored by the Prime Minister’s Office.

Mr Harsh Pati Singhania

The FICCI President, Mr Harsh Pati Singhania, also highlighted the need to bring down interest rates and increase consumer credit.

Citing that the huge subsidies provided by the Government were adding to the mounting fiscal deficit, Mr Srinivasan said that there should be “target subsidies” provided to a deserving class through a ‘Smart Card’. “Disinvestment could raise about Rs 30,000 crore,” he said.

Power scarcity

Another important obstacle faced by industry is the shortage of power and the high costs attached to it. “Power has been a singularly biggest problem for manufacturing,” said Mr Srinivasan. This, he said, is because the industry ends up paying for the power subsidies. “Industrial concerns, like malls, can buy power at higher peak rates,” said Mr Srinivasan. “We need multi-tariff systems for projects which are power-intensive.” Domestic and foreign investment in agriculture needs to be encouraged, while there needs to be a de-regulation of the fertiliser sector, he said.

Mr Rajan Mittal, Senior Vice-President, FICCI, said that retail should get FDI, “There are enough resources in India but extensive technology and funding is required in the retail sector,” he said. FICCI has approached the government seeking to open up and allow FDI up to 49 per cent in multi-brand retail. The chamber also suggested a raise on FDI cap in insurance firms from 26 to 49 per cent.

“We are looking to present our recommendations to the new Commerce and Industry Minister, Mr Anand Sharma, tomorrow,” said Mr Srinivasan.

More Stories on : Industry Associations | Disinvestment | Interest Rates

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