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The plan to implement Goods and Services Tax deserves “more political support” as it is good for all, according to Ms Naina Lal Kidwai, Senior Vice-President, Federation of Indian Chambers of Commerce and Industry.
Ms Kidwai said the Federation firmly believes that implementing GST needs the support of all State Governments irrespective of political considerations as all sectors will benefit from it. Just the shift to the new tax regime will represent a 2-3 per cent jump in GDP.
Ms Kidwai, who was addressing a press conference here on Sunday, on the eve of FICCI’s national executive committee meeting, said the industry is hoping interest rates are brought down to catalyse investments. This is an imperative for economic growth despite continuing inflationary pressures which mean that “interest rates are bound to be sticky” but the overall trend has to be downward, she said.
The Government has to pass the Pension Bill and Insurance Bill to enable insurance companies and pension funds participate in financing infrastructure, as is common globally. Access to offshore funds, supported by a robust debt market, is also necessary, she said.
The Federation’s President, Mr R.V. Kanoria, said the industry is hoping the Government gets its financial planning on track to control fiscal deficit. Prudent expenditure management through better and targeted delivery of subsidies, not announcing new doles and cutting down on subsidies, particularly on diesel, will help limit its borrowings.
This will, in turn, provide space for bank interest rates to come down and allow access to funds for the private sector.
Interest rates will have to come down by 200 basis points and Cash Reserve Ratio by about 100 basis points to free up funds for investments by the private sector.
The call by the industry body for concerted political support for economic measures came through strongly. The industry representatives emphasised the need for a “clear recognition on part of the ruling parties and the opposition that we are in a crisis situation.” Coalition governments in 1991, 1997 and 2008 have taken tough decisions during economic adversity.
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