The Hindu Business Line : India Inc concern over roadblocks to growth rate

INDIA Inc has supported the five-point action agenda proposed in the Economic Survey — the need for fiscal consolidation, boosting farm growth, expanding industry by 10 per cent, keeping inflation rate to 5 per cent and sustaining a growth momentum of 7-8 per cent. It, however, pointed out that despite the indicated growth rate concerns facing the economy show no sign of abating.

Mr Yogendra K. Modi, President, the Federation of Indian Chambers of Commerce and Industry (FICCI), said, "We are gratified that the survey has placed high priority to overhauling the tax regime and the need for addressing the roadblocks in the way of Indian industry. The survey has mentioned distortions in the indirect tax structure, restrictions in closure of firms and rigidities in labour laws among the constraints for faster industrial growth."

The chamber took note of the caution sounded by the survey on the possibilities of a spike in the interest rates in the context of hardening global oil prices. It believes that a sudden spurt in interest rates could act as a check on the growth process and this calls for concerted immediate action.

The Associated Chambers of Commerce and Industry of India (Assocham) President, Mr Mahendra K. Sanghi, expressed optimism saying that the targets of achieving 10 per cent and 8 per cent industrial and GDP growth respectively as projected in the Economic Survey 2003-04 were feasible provided adequate infrastructure facilities such as roads, transport, and power are available to industry.

Mr Sunil K. Munjal, President, Confederation of Indian Industry (CII), felt the decline in public investment was a serious concern. "The private sector should now be encouraged to participate in the rural economy. This can be done by the rapid development of the agro-processing sector. The Survey has also rightly pointed out the problems created by the minimum support price (MSP) regime, which has been a disincentive for crop diversification."

The Survey also recognised the importance of early implementation of VAT, one of industry's key demands. Mr Munjal said that significant reforms in State-level taxes were needed to develop an efficient tax structure.

Mr Ravi Wig, President, PHD Chamber of Commerce and Industry (PHDCCI), pointed out several areas of concern that could hamper the growth rate including dependence on agriculture to push GDP growth upwards like in 2003-04, near stagnancy of the savings rate at 23-25 per cent in the last decade, ever-worsening combined Centre and States fiscal deficit, a pick-up in inflation, anticipated hardening of interest rates, rising fuel/energy cost, stagnating FDI and so on.

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