With the proactive measures taken by the Indian government and the Reserve Bank of India (RBI), the industry believes that the slowdown will be overcome and a gradual recovery will soon be in place, according to the Confederation of Indian Industry (CII), which saw nascent signs of the economy being at a better footing in 2020 than what it was this year.
“The results are fast percolating through and becoming increasingly evident on the ground. Nascent signs of recovery are noted in the form of improved PMIs [purchasing managers’ index] of manufacturing & services, jump in passenger air traffic, sharp moderation in the decline in sales of passenger cars among others”, said CII president Vikram Kirloskar in statement.
“Though we may continue to see a subdued GDP [gross domestic product] print in the third quarter as well, but the quarters thereafter are likely to see a rebound,” he said.
With the initial difficulties associated with the structurally positive measures of GST and the IBC getting gradually ironed out, the industry is hopeful that this will result in the accrual of substantial benefits for the economy, CII said.
The year 2019 will be remembered as one where the systemic clean-up of the financial sector picked up pace, which might have resulted in short-term pain for the economy. However, this tidying up will have extensive positive ramifications for the economy in the short to medium term, the trade body said.
“On balance, all these factors will have a significant bearing on growth in the next fiscal. Add to this the easing of global trade tensions along with lagged impact of monetary easing coupled with improved transmission, and we are in for a gradual recovery getting firmly entrenched by the next fiscal”, Kirloskar commented.
CII feels that with the sharp moderation in growth, the time has come to adopt an expansionary fiscal policy. In order to increase the tax base and ensure higher compliance, it is necessary to simplify and reduce the number of goods and services (GST) tax rates and increase its coverage. Once it is converged, the practice of reviewing rates at every meeting of the GST Council must be discontinued, CII added.
To boost rural demand, CII has recommended that the payments under PM-KISAN scheme be expedited. The scheme may also be extended to include non-farmers engaged in allied activities like livestock and fisheries. In addition, the government could also consider phasing out of agri-input subsidies, the funds from which could be used to enhance direct cash transfers to the farmers.
CII would engage with its membership, especially those in the small and medium scale sector, to help boost their competitiveness. CII has also highlighted the need to build business confidence through policy stability.
Fibre2Fashion News Desk (DS)