'Key reforms can bring economy back on growth path'

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SME Times News Bureau | 26 Apr, 2012
The Confederation of Indian Industry (CII) Wednesday said that the Centre needs to push its reform efforts in some key areas, such as foreign direct investment, Goods and Services Tax, and Direct Taxes Code to bring the economy back on growth path.

"CII believes that a few key reforms will enable higher growth and investment which will be positive for government revenue while expenditure can be curbed by implementing policies to control and target subsidies," the industry body said in a press statement.

While the Government should take measures to push for reforms especially in the areas of FDI, GST and DTC, further opening up in sectors such as Aviation, Insurance and opening up multi brand retailing is also necessary to help improve foreign capital inflows and also improve investors' sentiment, it viewed.

The industry body said that it is seized of the concerns expressed by S&P in its rating downgrade – viz. high deficit and debt burden of the government. "In February 2012, S&P had warned that the balance of risk factors for the current sovereign credit rating on India may be shifting to negative," it added.

Ratings agency Standard & Poor's Wednesday lowered its outlook on India to negative from stable, and warned of a ratings downgrade citing deteriorating economic indicators and slow progress on fiscal reforms in the backdrop of a "weakened political setting".

On the fiscal consolidation front CII suggested measures to augment revenues and rationalize expenditure. It also stressed the idea of setting up a public expenditure commission to monitor the efficacy of public expenditure.