Industry sounded upbeat over the 10 per cent growth target set by Government in the Economic Survey presented in Lok Sabha on Wednesday but expressed concern over the decline in public investment as well as the lurking fear of spiking of interest rates.
Welcoming the Survey, Confederation of Indian Industry president Sunil Munjal said the industry was encouraged over the government setting up a growth target of 10 per cent. "The report rightly focusses on the need to maintain 7-8 per cent economic growth," he added.
Economic Survey 2003-2004: Complete Coverage
Federation of Indian Chambers of Commerce and Industry president Y K Modi hailed the Five-point Action Agenda proposed in the Survey highlighting the need for fiscal consolidation, boosting farm growth, expanding industry by 10 per cent, keeping inflation rate to five per cent and sustaining growth momentum at 7-8 per cent.
Attacking the minimum support price regime, Munjal said the Survey has rightly pointed out the problems created by the MSP system "which has been a disincentive for crop diversification".
Fearing that a sudden spurt in interest rate could act as a check on the "growth process", Modi asked the Centre not to go for spiking it in the backdrop of hardening global oil prices.
Expressing concern that the decline in public investment in agriculture was a matter of concern before the country, Munjal urged the government to take steps to encourage private sector participation in rural economy.
Demanding simplification of tax structure, Modi said, "We are gratified that the Survey has placed high priority to overhauling the tax regime and the need for addressing the roadblocks in the way of Indian industry."
"The Survey has also mentioned distortions in indirect tax structure, restrictions in closure of firms and rigidities in labour laws," he added.
Seeking divestment of up to 49 per cent in 'Navratnas' and other profit-making PSUs and 74 per cent in loss making units, Ficci said the proceeds of divestment should go to a dedicated fund for financing various government schemes for socio-economic development.
Referring to the Survey's recommendations to further liberalise FDI and FII regimes, Munjal said the share of manufacturing, accounting for 17 per cent in GDP, be stepped up by giving the right signals to the investing community.
Worried over fiscal deficit standing at 10.10 per cent, CII stressed the report has highlighted the importance of fiscal consolidation. Munjal said the deterioration in state government finances is a matter of serious concern as it has a direct impact on the spending in socially important sectors such as health and education.
Association of Indian Chambers of Commerce president M K Sanghi advocated faster implementation of value added tax, further rationalisation of taxes and immediate pruning of the reserved list for the SSI sector and labour law reform.
PHD Chamber of Commerce and Industry president Ravi Wig said that besides curbing expenditure, it is also important to augment revenue in order to reduce fiscal deficit demanding raising the tax-GDP ratio.
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