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India Inc hails Economic Survey II
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SME Times News Bureau | 12 Aug, 2017
Hailing the Economic Survey II 2016-17 for its "correct assessment" of
the deflationary stress in the economy, India Inc on Friday said that
there was a need for a substantial cut in the policy rates by the RBI.
"The
Economic Survey-2 presented to Parliament has done a correct assessment
of the state of the economy, highlighting the stress in various sectors
such as power, telecom even as deflationary impulses are due to subdued
demand," Associated Chambers of Commerce and Industry of India
(Assocham) Secretary General D.S. Rawat said.
He said the Survey
has also rightly pin-pointed the moderation in growth in industrial
output as also services, the key drivers of the economy. Both these
sectors need some immediate steps like resolution of the bank
non-performing assets (NPAs) and a pragmatic approach for the "twin
balance sheet" problem, Rawat said.
Reforms like disinvestment of
Air India and emphasis on raising non-fare revenue for the Railways are
welcome suggestions along with those relating to education and health,
he said.
The key takeaways from the Economic Survey are the
higher end of the GDP growth forecast of 6.75-7.5 per cent looks
unlikely in FY18, a structural shift in the inflationary process toward
low inflation is underway, the RBI has overestimated the consumer price
index (CPI)-based inflation by above 100 basis points in 6 of 14
quarters and the current repo rates are 25-75 bps above neutral rates
indicating room for further reduction in repo rates.
The
Federation of Indian Chambers of Commerce and Industry (Ficci) said:
"The survey clearly lays out the opportunities and the risk factors that
could have a bearing on the near to medium term growth performance of
the Indian economy."
"While developments such as introduction of
GST, in principle decision to privatise Air India, steps taken to
address the twin balance sheet problem and the continuous roll out of
reforms across segments lend confidence, there is an element of anxiety
on account of factor such as farm loan waivers, dip in non-cereal food
prices and weakening performance of sectors such as power and
telecommunications," it said in a statement.
"The deflationary
impulses in the economy need to be countered through all possible policy
levers as identified in the Economic Survey."
There is a need to
substantially cut down the policy rates by the Reserve Bank of India
and ensure its full transmission by the banks in the form of lower
lending rates for consumption and investment activities, the industry
body noted.
"A cut in interest rates would spur demand, push up
capacity utilisation rates and help reduce pressure on the corporate
balance sheets thereby enabling them to plan for fresh investments.
Unless the private investment cycle revives, sustaining growth and
generating jobs in large numbers will be difficult," Ficci added.
Sunil
Kumar Sinha, Principal Economist, India Ratings and Research said:
"Survey correctly cautions about the series of deflationary impulses
weighing on the economy due to looming twin balance sheet challenge,
declining profitability in the sectors such as power or
telecommunication sectors, the launch of the GST and demonetisation."
Sinha
said that however the survey fails to provide an answer that despite
growing macro-economic stability and various policy initiatives taken by
the government, how long will it take for India's GDP growth to realise
its potential.
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Customs Exchange Rates |
Currency |
Import |
Export |
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64.50 |
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87.50
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84.65 |
Euro
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75.65 |
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56.85 |
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