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“Think 10% GDP Growth Rate India: CII President, Part – 3″
06-Jun-2019
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Focus on growth, jobs, trade and sustainability
KHL News Bureau
hegdekiran17@gmail.com
However, to pull the 27 crore Indians (World Bank, 2012 data) from below the poverty line and to generate 70-80 lakh jobs a year to gainfully employ its youth, the economy needs to grow at a sustained 8-10% per annum. CII expects the twin priorities of high growth rate and livelihood & job creation to be achieved by enhancing the competitiveness of the Indian economy and Indian industry through a stronger push to reforms, both structurally and sectorally.
The first 100 days of the new Government is an opportunity to set the direction and pace of the reform agenda for the country over the next 5 years. Some of the key recommendations of CII for the New Government include:
1.Fiscal Deficit Management: International investors and rating agencies closely monitor the fiscal performance of governments. Therefore, fiscal deficit management has a bearing on investment inflows. It also impacts interest rates and availability of capital for private investments.
CII Recommendation
Use a composite index which captures both the fiscal deficit and the quality of the budget to track fiscal performance. Single ratio of fiscal deficit to GDP only captures the quantum of expenditure.
2. Livelihood and Job creation: This issue has two aspects – one is creation of the opportunities themselves and the other is making sure that the Indian youth is adequately skilled to be able to make use of these opportunities.
CII Recommendations:
Announce a comprehensive National Employment Policy as suggested by NITI Aayog, in consultation with industry.
Encourage states to notify Fixed Term Employment to provide flexibility to industry in hiring. Ministry of Labor and Employment, GoI, has already notified Fixed Term Employment.
Institutionalize Industry-Trade Union -Government dialogue forums to expedite the four labor codes.
3. Catalysing Investments in industry and infrastructure: Investments, especially private investments, have remained a drag on growth with the investment ratio (in current prices) coming down sharply from a healthy 39.6% in FY12 to 31.0 in% FY19.
CII Recommendations
Unlock capital for investments
Review IBC 2016 to provide effective resolution of Group Insolvency; allow cross-border insolvency; streamline process timelines; enhance judicial infrastructure and balance creditor interests, especially MSMEs.
Expedite delayed payments to private sector – monitor resolution at the highest levels.
Capital locked in arbitration – put in place effective dispute resolution mechanism.
Incorporate section on re-negotiation in infrastructure contracts post a specified period of commercial operation
Expedite the proposed National Tourism Policy to create an overarching national framework for facilitating growth of tourism sector across the country. The framework should address issues of strategy, tourism infrastructure and connectivity.
Finalise the National E-Commerce Policy Framework in consultation with industry.
Expedite the New Industrial Policy for investments in the manufacturing sector.
Start negotiations on bilateral investment treaties to secure foreign investments.
Taxation
Direct Taxes
Lower corporate tax rate to 25% for enterprises of all sizes. Gradually, reduce it further to 18%.
Expedite the announcement of the new direct tax legislation.
Extend investment allowance to all capital investments across sectors.
GST
Work towards subsuming petroleum products, natural gas, electricity, alcohol and real estate under GST.
Move towards recasting GST to three rates. ‘Standard’ or items of mass consumption should converge into a single rate between 12% and 18%; ‘demerit’ goods should fall in the highest tax category i.e. 28%; while ‘merit’ goods including items used by the poor to be shifted to 5% or the nil slab.
Simplify filing of GST returns.
Agriculture: Growth in this sector is a pre-requisite for strong overall economic growth. The sector continues to be highly regulated and has not been able to attract much of private investments. As agriculture is a state subject, onboarding of states onto the reform process is the key to the success of this sector.
Set up a Council with Union Agriculture Minister as Chair and State Agriculture Ministers as members (on the lines of GST Council) to facilitate implementation of model Acts for development of Indian agriculture and other agri reforms.
Institute an Ease of Doing Agri Index – to encourage states to adopt agri reforms.
Finalise the model FPO framework being drafted by Ministry of Agriculture and Farmers’ Welfare, in consultation with stakeholders, to help farmers benefit from aggregation, by improving access to investment, technology, input, market and managerial capabilities.
Industrial growth: Industrial production as denoted by the index of industrial production moderated to 3.6 % in 2018-19 as compared to 4.4 % in 2017-18. The deceleration has been led primarily by manufacturing (3.5 %) sector in 2018-19.
CII Recommendations
To grow manufacturing and manufacturing competitiveness, adopt an integrated value chain approach. Start with select high impact sectors -Capital Goods, Textiles and Electronics.
Develop a nodal India Industry 4.0 Platform co-led by Government & industry to create an action plan for smart manufacturing including enabling eco-system for fostering Industry 4.0 adoption.
MSMEs: MSME sector is the backbone of the Indian economy. With around 63.4 million units throughout the geographical expanse of the country, MSMEs contribute around 6.11% of the manufacturing GDP and 24.63 % of the GDP from service activities. They contribute around 40% of the overall exports from India.
CII Recommendations
Instruct all Central Ministries to clear the pending dues of MSMEs, till date, within a stipulated time.
Provide facilities to promote zero defect manufacturing and energy efficiency in industry clusters.
Exports: Boosting exports, especially in employment intensive sectors, can help improve the Current Account Deficit (CAD) and generate employment.
CII Recommendations
Provide market support for export promotion by setting up dedicated agencies like MATRADE, UKTI, Buy USA etc.
Integrate Standards into India’s trade strategy to boost export competitiveness.”
