Reintroduce investment allowance, cut interest rates: CEOs

A snap poll shows that a majority of chief executive officers expect a revival in the fortunes of the manufacturing sector happening only beyond a one-year time horizon and suggest a slew of measures to revive investor sentiment, including re-introduction of investment allowance in the Budget.

The CEOs also suggest much larger spending on the part of the public sector enterprises to spur demand.

This, combined with further reduction in interest rates by the Reserve Bank of India, could potentially revive investment in the economy, the poll by the Confederation of Indian Industry says.

A majority of CEOs project the current fiscal to end with economic growth of less than five per cent. For 2002-03, on the other hand, most of the CEOs expect a minor revival of growth. The growth in gross domestic product, according to respondents, would be between five and 5.5 per cent in 2002-03.

The poll was conducted to understand the industry's expectations from the Budget, which has assumed increased significance in the bid to revive sentiments in the economy. This being especially true for the manufacturing sector -- which is witnessing a sustained phase of low growth -- the poll was biased towards manufacturing.

The questions covered overall economic issues and indirect and direct tax-related matters.

The reintroduction of investment allowance for a limited period was justified given the growing imbalance in the economy in terms of the declining share of the manufacturing sector.

Fiscal incentives and procedural simplification for corporate restructuring were also critical measures that the CEOs were looking forward to.

Anticipating hectic restructuring activity in the tough and fiercely competitive times ahead, a majority of them felt that any measure to simplify the fiscal structure for corporate restructuring would significantly affect them.