New Delhi, Sep 22 (IANS) In the wake of dampening economic growth, a top industry body on Friday called for an interest rate cut of 100 basis points and interventions for depreciation of rupee to increase export-related jobs.
"We firmly believe the current blip in growth rates is temporary. We are confident of a strong recovery by the fiscal year-end as industry gets over the teething problems of Goods and Services Tax (GST) and other positive measures take effect. New investments will also start early next year as capacities fill up," Confederation of Indian Industry (CII) President Shobana Kamineni said in a statement.
"The CII calls for an interest rate cut of 100 basis points for boosting economic growth rate. It also suggests interventions for depreciation of the exchange rate that will increase export-related jobs," the statement said.
The growth in the first quarter of this fiscal fell to a low of 5.7 per cent.
A cut in interest rates would encourage domestic demand in sectors such as affordable housing, consumer durables and construction. Interest rate subvention in certain sectors such as exports, housing, and Micro, Small and Medium Enterprises would also help increase growth, it said.
The industry body said that there might be a need to relax the fiscal deficit targets to accommodate stimulus measures, particularly for job-creating sectors.
The Fiscal Responsibility and Budget Management Act permits a deviation of 0.5 per cent of the Gross Domestic Product on account of exceptional circumstances. The introduction of the historical tax reform of GST calls for certain adjustment time, the CII statement said.
"The efforts of the government towards building a formal, organised economy are encouraging and this requires all players to go through a period of adjustment. Industry is keen to accelerate this process while also creating the necessary jobs and lead to a virtuous cycle of higher incomes and demand," Kamineni said.
On the GST front, the CII recommended procedural changes to ease initial administrative processes.
"These include addressing reverse charges, redressing mismatches of higher rates on inputs and lower rates on final goods and grandfathering of existing regional incentives among others. Also, input tax credit refunds for exporters need to be passed on," the industry body said.
The CII also highlighted the need for bank recapitalisation for enabling credit growth to revive the economy. The government might consider lowering its stakes in public sector banks for this purpose, it added.