New Delhi: Bold reform measures are required to overcome existing challenges and push the economy to a higher growth trajectory, the Federation of Indian Chambers of Commerce and Industry (FICCI) said on Wednesday.
Six key points of the agenda are the passage of the pending bills in Parliament, the announcement of policies (including e-commerce, industry, retail, and e-pharmacy), simplification of Goods and Services Tax (GST), lowering of interest rates, addressing farm distress and creation of an eco-system that promotes employment.
“The Central government’s focus in the Budget has to be on spurring investment,” said FICCI president Sandip Somany. “The cost of doing business is very high. While there is a need for reducing the interest rate by at least 100 to 150 basis points, the corporate tax rate too must be cut for all the companies to 25 percent from the current 30 percent.”
There is also a need to review the minimum alternate tax (MAT) structure which is too high, he said. Further administrative simplification in the GST and other laws to improve the ease of doing business scenario is also required.
So many said the new government led by Prime Minister Narendra Modi succeeded in bringing in critical reforms, including GST, Real Estate Regulation and Development Act and Insolvency and Bankruptcy Code during its previous tenure.
“It is time now to not only work towards the required modifications in them but also usher in the next wave of reforms, especially in the important areas of land, labor, and judiciary,” he said in an interaction with FICCI’s in-house publication Business Digest.
The government needs to work with the Reserve Bank of India (RBI) to take care of concerns with regard to non-banking financial companies so that apprehensions in the credit ecosystem subside quickly.
At the same time, said Somany, a robust reform agenda is required to not only boost consumer sentiment but will also create conditions for higher private sector investments and exports.
Rural distress is another area of concern. The Direct Income Support Scheme is a step in the right direction and needs to be further strengthened.
“The real solution to the rural distress and farmers’ problems lies in the creation of a strong infrastructure to support agriculture, including irrigation and warehousing facilities. Besides, the reforms associated with agricultural marketing also need to be pushed so that farmers’ cost of production and selling is reduced,” said Somany.
He also called for the creation of a separate ministry for employment. “We possibly need to create as many as eight million jobs annually and put in place a robust system for capturing accurate estimate of jobs that are being created industry-wise,” he said.