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FICCI to review fiscal & monetary policy to look at gaps

08 Dec '08

6 min read

4.Increase long term liquidity by providing long term Tier I and Tier II capital to banks
5.Recapitalize banks – give them the Rs. 50,000 crore on agricultural loans immediately
6.Protect against systemic defaults by NBFCs by converting them to Banks and bringing them under regulation
7.Bring the focus back on FDI and attract sovereign funds (SWFs). Review caps in sectors like insurance, telecom, multi-product retail and aviation

MEDIUM TERM MEASURES:
1.Infrastructure is critical for the entire real sector to perform. Initiating large infrastructure projects could act as pump priming in reviving economic activities & growth. The government should look at investing an additional Rs. 100,000 crore per year on building infrastructure in the country
2.Agri - reforms should be pursued with a sense of urgency as agricultural output plays a critical role in determining the inflationary pressures in our economy
3.Push for alternative sources of energy. We need to have oil conservation strategies in place and give complete support to developing renewables
4.Stop export of raw material. India's resources should be used for undertaking value addition within the country

SECTOR SPECIFIC MEASURES:

Textiles:
1.Higher interest subvention and duty drawback rates. Government has withdrawn the interest subvention of 4 percent on export credit given to textiles exporters with effect from 1st October 2008. Also, Government has reduced the drawback rates for many textile items in view of the fact that rupee is depreciating. However, textiles industry in India is severely hit by rising input cost and declining orders from abroad. These benefits, therefore, need to be restored immediately for the textiles industry
2.Refund under TUFS. The domestic textile firms are concerned about the delay in getting approved funds from the Government under the TUFS (Technology Up-gradation Funds Scheme). For the last nine months, textiles industry has not been getting the benefits under the scheme. Refunds under the TUFS scheme should be made immediately.
3.Moratorium on Term Loans. A moratorium of one year may be allowed for repayment of term loans taken by textile mills to avoid any NPAs in banks. Financial Institutions could be advised to restructure their loan portfolios.

Infrastructure:
Government should immediately start implementing infrastructure projects under National Highway Development Project, National Maritime Development Programme etc. which have been financially tied up Accelerate the pace of work on the Delhi-Mumbai Rail freight corridor. Government should also initiate work on private sector participation for modernization of Railways

Housing and real estate:
1.Interest rates and mortgage rates should be reduced to stimulate consumer demand for home loans. Interest rates should be reduced for Retail Home Loan buyers by 200 basis points and for first homebuyer by 400 basis points.

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