Commodity Online
NEW DELHI: Dr. Manmohan Singh led government’s top priority should be to initially earmark 1.5% of national GDP in stimulating demand as part of its 3rd stimulus package to the nation in 2009-10 and revive its sagging economy,according to the Associated Chambers of Commerce and Industry of India (ASSOCHAM).
Demand stimulation, according to ASSOCHAM can be possible by slightly making adjustments in India’s existing direct and indirect tax structure and lend purchasing power to consumer, which is the need of hour.
Earmarking 1.5% of GDP would initially mean Rs.50,000 crore’s burden on government kitty in next 9-10 months as it would be required to further slash excise, customs, personal income and corporate tax and other levies and provide relief to consumers to enable them purchase goods and services.
ASSOCHAM President, Sajjan Jindal said, “the proposed move would also amount in reducing input costs and accelerate manufacturing to provide for cheaper goods and services, which is what consumers want”.
The prevailing industrial reality is that industry has production but little buyers as there is no purchasing power with them. Buyers can acquire purchasing power provided through tax cuts, it can save some liquidity and buy goods and services at competitive rates for, plenty of them are available in the market.
In addition to relaxing taxes and inadvertent duty structure, Dr. Manmohan Singh led government should also lay out clear cut guidelines for revising its tax slabs to boom time economy period after it has succeeded in bringing back economy on proper tax.
The ASSOCHAM Chief also pointed out that demand creation should follow growth in jobs which can be possible with manufacturing getting a priority treatment. Success of manufacturing would depend on government’s policies on infrastructure investment both overseas and domestic.
Trade sitting at the comfort of home. Start with a mere 50$Therefore, new investment guidelines need to be rolled out with clarity and transparency as investors have resources but waiting for clarity in investment’s guidelines through which existing urban and rural divide can be bridged.
According to ASSOCHAM, agriculture needs to be revamped and for which 2nd Green Revolution is called for through which not only food grains production would increase manifold but farmers would also become a core participant in supply value chain and thereby become part of the inclusive growth mantra of Dr. Manmohan Singh.
Ongoing National Rural Employment Guarantee Programme needs further consolidation as its first phase results have influenced mandate of rural electorate in favour of UPA government.
According to the statistics, 50% of rural folks have beneficiary to national rural employment programme which goes to show that this popular scheme needs further improvement to make rural poor self-reliant to some extent, holds the ASSOCHAM.
On FDI’s front especially on Press Note 1 to 9, several anomalies exists which restrict smoother flow of foreign investments towards India. the Department of Commerce & Industry should remove such aberration as throttle channels of overseas currency and investments into India.
And lastly, the process of reforms should be hastened and especially these are needed for labour, insurance, civil aviation, banking and administration reforms. Government expenses are still on higher side which need to be re-looked at to divert wastages towards productivity, concluded Jindal.
