Economy in crisis: India Inc wants ₹1 lakh cr stimulus package
FM Nirmala Sitharaman met industry captains to seek consultations for boosting industrial growth in which India Inc placed a demand for stimulus package of over ₹1 lakh crore to beat the slowdown
India Inc has sought a stimulus package of ₹1 lakh crore to push investment and demand and take the economy and industry out of slowdown. Finance Minister Nirmala Sitharaman on Thursday met industry captains to seek consultations for boosting industrial growth in which India Inc placed a demand for stimulus package of over ₹1 lakh crore to beat the slowdown.
Industry top officials said the government has assured them to take steps soon to boost the economic growth.
In a meeting with top industry leaders, called by Finance Minister Nirmala Sitharaman to discuss ways to revive the growth, Assocham President B.K. Goenka said amid the current slowdown in global and domestic market, there is a need to have quick-fix solutions.
"The economy requires a critical intervention by introducing a stimulus package. We have suggested for a package of over ₹one lakh crore," he said.
After the three-hour meeting, India Inc also said the government has assured them that it would take action soon to revive the industry and push economic growth, he said.
JSW Group Chairman Sajjan Jindal said: "It was decided that the government is going to take action very soon to revive the industry and it is a matter of sentiments. We got positive feedback from the finance minister". The industry is suffering from issues in sectors like steel, NBFC, and automobile.
Piramal Enterprises Chairman Ajay Piramal said that the industry raised several matters such as reluctance of banks to lend to the industry. "It is not that there was a lack of liquidity in the banks, but lending is not taking place. There is stress on the economy as far as NBFC sector was concerned," he told reporters after the meeting.
He added that the NBFC issue is impacting sectors like auto, home loan, and MSME. aceI am told that there will be action soon. So, we will wait for that," he said.
Goenka said to boost exports and ensure stability, tax policies and schemes on refunds and incentives should be made steady and continuous, without intermittent changes. Given the fiscal constraints, the government can raise resources by monetising idle government land. In turn, such land can be used for affordable housing and new projects.
"While India's exports are declining, exports in June itself showing a drop of over 9 per cent year-on-year, the unabated US-China trade war throws many opportunities for India, which needs to be tapped.
Higher rate of corporate taxes in India also make Indian businesses uncompetitive. Reviving private sector capex is also key to the economic growth. One of the growth drivers would be investment allowance and accelerated depreciation in green field project. There should be incorporation of accelerated depreciation system in first year or over 3 years. Tax rebates can be given for profits ploughed back as investment in new projects, he said.
Though there has been rationalization in the category of goods falling under 28 per cent GST, there are still 33 items which remain in the highest slab. "It is recommended that the rate of other goods falling under such category such as cement, consumer durables, automobiles including parts thereof etc should be reduced to 18 per cent".
The Government is also said to have assured that punitive penal provisions concerning non-compliance with CSR spending norms under the companies law would not be pursued.
Piramal said the industry demanded that oversight on CSR spending should not result in any imprisonment.
Vice-President CII T V Narendran said the government sought views on ways to further stimulate the country's economic growth. "Across the board, we discussed the key issues," he said, adding slowdown in the auto industry would have an implication on the steel sector.
Sandip Somany, President, FICCI, said transmission of cut in interest rate to consumers by banks is a big issue. "Banks must be encouraged to pass on the benefits of rate reduction to consumers and borrowers. We are hopeful of further rate cut. It is encouraging that the RBI has reduced rates by cumulative 110 basis points," he said.
Goenka strongly advocated setting up a 'development bank' which will support startup risk capital. He also sought the Finance Minister's consideration on Accelerated Depreciation on investments as another measure to encourage investment.
Emphasising the immediate need for revival of exports, Assocham president said there are sectors such as textile and garments, are suffering due to constant review and frequent changes being brought in tax refunds/incentives schemes.