New Delhi: Amidst concerns over slowdown in growth due to the transient disruptions in the economy following GST implementation and the remaining over-hang of the demonetization, India Inc is looking up to the government to take a few ‘out of ordinary’ steps like relaxation of the fiscal deficit targets and increase in public spending to boost investment –led growth that would lead to more jobs and revival in consumer demand, the ASSOCHAM has said in its recommendations to the government.
Ahead of the credit policy review on October 4, the chamber has also written to the Reserve Bank of India and the Monetary Policy Committee to cut the interest rates at least by 25 basis points, given the challenges being faced by the economy which needs immediate measures for revival of growth.
“At least 50 basis points elbow room can be taken with regard to 3.2 per cent fiscal deficit for the current year and the next financial year. The fiscal targets can be taken to 3.7 per cent, but with a strict oversight over quality of expenditure so that the extra resources are wisely spent in building and reviving investment in infrastructure sectors like roads, power, railways, ports etc,” the ASSOCHAM Secretary General Mr D S Rawat said, adding the situation requires immediate intervention of the government so that any disruptive impact of the Goods and Services Tax is minimized. For instance, in view of the difficulties being faced by the small and medium sized traders in filing of returns, ways must be found to reduce the compliance cost for the trade. The issue can be taken up at the forthcoming meeting of the GST Council.
In its letter to the RBI Governor Dr Urjit Patel, the ASSOCHAM Secretary General said the “economy is facing multiple challenges as growth is slowing down and investment is not picking up. Consumers have cut down on spending and businesses have also lost momentum …”
Stressing that the rupee is still over-valued, the chamber said the “effective exchange rate of INR has appreciated against our trading partners. This has an adverse impact on exports .RBI should be persuaded to target the real effective exchange rate more effectively”. Besides, the problems being faced by the exporters arising out of the GST implementation should be addressed to without loss of time. “Exports picked up in August and we need to maintain and build the momentum,” the chamber said.