The growth rate projection of 6.9 per cent for the current financial year is on expected lines and the government should take “urgent” steps like slashing interest rates and improving investor confidence to accelerate economic expansion, India Inc said on Tuesday.
“Interestingly, at FICCI, we were, in fact, expecting a 6.9 per cent growth rate for the current fiscal and our fears have now been vindicated with an estimated sub-7 per cent growth,” the industry body’s Secretary-General Rajiv Kumar said.
He said the real disappointment is the growth rate in agriculture sector at 2.5 per cent, a significant climbdown from 7 per cent in 2010-11.
The GDP growth of 6.9 per cent is the slowest in the last three years, mainly due to a sharp slowdown in manufacturing, agriculture and mining sectors. The economy registered 8.4 per cent expansion in the last fiscal.
In order to stabilise the situation, FICCI suggested ways like immediate policy intervention by both the government and the Reserve Bank of India (RBI).
“Unless, the government takes urgent steps for improving investor confidence, reduce interests and stabilise the fiscal balance, 2012-2013 GDP growth is unlikely to be significantly better, with weak global economic prospects,” Mr. Kumar added.
“The advance estimates released on Tuesday show that both consumption and investment demand slowed down in 2011-012, resulting in the slowest GDP growth in the last three years,” said CII Director-General Chandrajit Banerjee.
In order to give boost to growth, CII suggested measures like introducing investment allowance and simplifying the regulatory and tax compliance framework.
“If the RBI also shows its willingness to moderate interest rates over the coming (fiscal) year, CII believes that it would be possible to return to the 8 per cent growth path,” Mr. Banerjee said.