NEW DELHI: The two economic stimulus packages announced by the government will take time to trickle down and more steps are required to stimulate
demand, said industry body Ficci's newly-elected president Harsh Pati Singhania.
"We are expecting cuts in both corporate and income tax besides restoration of investment allowances in the interim budget," he said soon after taking over the reins of Ficci.
Assessing the liquidity position in the country, Mr Singhania said that although the government has taken steps to infuse liquidity into the market, banks are not lending. "They are instead deriving comfort from parking funds in the reverse repo window with RBI. The government should disincentivise such windows and push banks to lend more," he said.
He also pointed out that India is eyeing 7% average growth this fiscal when economies across the world have limited or no growth avenues. Since India offers real growth opportunity, foreign investors will be compelled to park their funds in the country, said Mr Singhania adding that the country’s GDP growth in 2009-10 will surpass 6.5%.
Although, India is likely to miss the $35-billion FDI target in the current fiscal owing to global financial meltdown, the new Ficci chief expressed hope that the country will see better times ahead.
"This fiscal is almost over and India so far has received $25-billion worth of overseas investments. It's difficult to say how much of the remaining $10-billion targeted for FY09 will come as globally people have become conservative and are saving cash. But India is well placed to see significant FDI in the medium to long term," said Mr Singhania.
He also suggested that the government should increase spending on projects that have already been announced and ensure they come up on time. "Many projects in the housing and infrastructure sectors have been held back because of land use issues. The central government along with the state governments should work towards clearing some of the roadblocks," added the new Ficci president.
Considering the fact that India's exports declined in December last year, Mr Singhania has sought tax concessions for 15 top export items.
Source : The Economic Times