In a meeting of top industry leaders, called by Finance Minister Mrs Nirmala Sitharaman to revive economic growth, ASSOCHAM President Mr B K Goenka today sought a “quick-fix” stimulus package to initiate investment cycle and an immediate game plan to make the best out of the ongoing US-China trade war.
In his presentation before the Honourable Finance Minister, the ASSOCHAM President said, “With current slowdown in global and domestic market, we need to have quick-fix solutions and observe the economy for few years for the effectiveness of the Stimulus package.”
Mr Goenka said, given the fiscal constraints, the government can raise resources by monetising idle government land. In turn, such land can be used for affordable housing and new projects.
He said while India’s exports are declining, exports in June itself showing a drop of over 9 per cent year -on – year, the unabated US-China trade war throws many opportunities for India, which needs to be tapped.
Currently the diverted US investments and trade is being tapped by Vietnam and Bangladesh.
ASSOCHAM President strongly advocated setting up a Development Bank which will support start up risk capital.
He also sought the Honourable Finance Minister’s consideration on Accelerated Depreciation on investments as another measure to encourage investment
Emphasising the immediate need for revival of exports, Mr Goenka said there are sectors like textile and garments, are suffering due to constant review and frequent changes being brought in tax refunds/incentives schemes. He said an investment of Rs 1 crore in the garments/made up sector can create 72 new jobs. The investment-employment ratio in the textile sector is among the highest.
“Our export potential in the textile industry is further encouraged by rising costs in China and the advantage is being taken by Vietnam, Bangladesh and Mexico. We must emerge as a strong competitor,” the ASSOCHAM President said.
He said to boost exports and ensure stability, tax policies and schemes on refunds and incentives should be made steady and continuous, without intermittent changes.
Higher rate of corporate taxes in India also make Indian businesses uncompetitive. Mr Goenka said reviving private sector capex is also key to the economic growth. One of the growth drivers would be investment allowance and accelerated depreciation in green field project. There should be incorporation of accelerated depreciation system in first year or over 3 years. Tax rebates can be given for profits ploughed back as investment in new projects.
Though there has been rationalization in the category of goods falling under 28 per cent GST, there are still 33 items which remain in the highest slab. “It is recommended that the rate of other goods falling under such category such as cement, consumer durables, automobiles including parts thereof etc should be reduced to 18 per cent.”