Sounding a warning note, the Federation of Indian Chambers of Commerce and Industry (FICCI) has expressed apprehensions that the country’s growth rate could slide to 6 to 6.5% this fiscal year if the government and political parties fail to agree on economic reforms and take concrete steps immediately to put the economy back on rails.
Addressing a press conference here on the eve of FICCI’s National Executive Committee Meeting in Gandhinagar on Thursday, Mr Harsh Mariwala, President, and Dr Rajiv Kumar, Secretary-General, said the growth projections have already fallen from an optimistic 8-9 per cent to 7-7.5 per cent in the last 11 months.
“If things don’t change in the next three months, it may further slide down to 6-6.5 per cent.”
Saying that India is in for a difficult time as the 12th Five-Year Plan (2012-17) commences, Mr Mariwala, while stressing that policy reforms agenda must be the focus now, regretted that the reforms process had slowed down, giving rise to an impression of a “policy paralysis”.
This perception must change fast, he said, adding that the recent FDI fiasco has created a lot of uncertainty in India and abroad.
“This is perhaps the first time that the government has suspended a major economic policy decision. It is imperative to clear the air and the government moves ahead on critical economic reforms to impart a new lease of life to the economy.’’
FICCI has suggested that the government should immediately undertake supply and distribution reforms in the food economy to contain inflation, introduce goods and services tax (GST) in 2012, a roadmap for diesel price decontrol, give impetus to disinvestment and bring in reforms in the coal sector.
Dr Kumar said Mr Mariwala, in his interaction with the Union Finance Ministry officials yesterday, had even suggested that coal mines be privatised and Indians be encouraged to pay some tax and bring back their money stashed abroad for launching major government projects.
“Unlike in 2008, we do not have any more fiscal or monetary steps left for any bailouts. And we will not be able to absorb any external shocks now.”
The FICCI officials also said the government should refrain from populist measures for winning the next elections. Until now, the major hit has been taken by the manufacturing sector. If the financial woes of the US and Europe continue, even the services sector will be affected adversely, they added.