The Hindu Business Line : FICCI unveils agenda to achieve 10% GDP growth

THE Federation of Indian Chambers of Commerce and Industry (FICCI) on Thursday released a 12-point economic agenda for the nation to achieve 10 per cent annual GDP growth over the next five years on a sustained basis.

Briefing newspersons here on the action points of the agenda, Mr Yogendra Kumar Modi, President of FICCI, said that the federation had also enlisted steps needed to convert the listed 12 national priorities into reality. "We are hopeful that these will constitute the minimum national action programme for the next government."

The 12 points include poverty reduction through 10 per cent growth, employment, education, health, global competitiveness for Indian industry, world leadership in services, environment, housing & urban development, infrastructure and disinvestment. He said higher GDP coupled with labour reforms will help add 60 million jobs in the next five years and reduce unemployment levels from 9.2 per cent in 2002 to 2.9 per cent in 2009. The pick-up in employment levels, it is conceded, would be very much dependent on the improvement in employment elasticity through labour market reforms.

Pointing out that 10 per cent GDP growth would more than double the growth rate of per capita incomes to 8.4 per cent in the next five years, Mr Modi said it would also require that the savings rate be increased by another 9.2 per cent, to 34 per cent of the GDP in the next five years.

On how savings rates, especially household savings, could be boosted in an environment of falling interest rates, Mr Amit Mitra, Secretary General of FICCI, suggested that the flow should be in non-monetised savings, ideally in mutual funds and pension funds, which are set to witness a boom in the near future.

A step-up in growth rate would need higher investments that can be boosted by large corporate investments and more foreign inflows, it is stated. Mr Modi said according to FICCI projections, higher domestic savings and larger investments from abroad, as indicated by the savings-investment gap, would help push up gross investment rate to 33.5 per cent of the GDP.

The labour reforms suggested by FICCI include laws for improving flexibility in use of labour, wages linked to performance and productivity, provision for replacement of non-performing workers, separate set of labour laws for the SSI sector and encouraging states to pursue labour reforms on their own.

Mr Modi said for infrastructure development investments, innovative funding methods have to be developed for using long-term pension funds and insurance funds. FDI ceilings should be substantially raised for investment in order to facilitate overseas investment in Indian infrastructure, he pointed out.

On disinvestment, Mr Modi said given the ground realities, the government may consider prior selling of a controlling stake to a strategic investor, which could then be followed by a public offer, as in the case of Maruti Udyog. He felt the proceeds could be clearly earmarked for socio-economic development schemes related to health, education and unemployment insurance.

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