Top industry executives on Monday pitched for tax cuts and reforms in land acquisition and labour laws to put the country on a double-digit growth trajectory. 

“It is critical to continue with the same pace of reforms,” said Vikram KirloskarNSE 0.55 %, president of industry body Confederation of Indian Industry (CII), adding that with the kind of mandate the Narendra Modi-led NDA government has received from the people for its second term, “We wish the government will undertake reforms in the areas of land, labour and capital”. 

Highlighting the need for creating land banks, Kirloskar said the private sector continues to face difficulty in getting land for manufacturing units 

Kirloskar said reform in labour policy is sorely needed. He said while industry is not looking for freedom to “hire and fire” at will, the government should look at encouraging states to have fixed term employment contracts with higher wages. 

The CII has suggested imposing no personal tax for incomes up to Rs 5 lakh and a corporate tax rate of 25% sans any exemptions. “There is a need to stimulate all four tenets of the economy, namely consumption, investments, government expenditure, especially on capital expenditure, and a boost to exports” said Kirloskar, adding that the government could generate funds for infrastructureNSE 0.97 % investments by monetising unused government assets. Kirloskar, who is chairman of Kirloskar Systems Ltd, said, “With a landslide electoral victory and new council of ministers in place, we expect the government to engage strongly with industry to ideate and implement impactful policy solutions for double-digit growth.” 

Besides, the government needs to bring in direct taxes code (DTC) and the last leg of reforms in goods and servicesNSE -0.50 % tax (GST). Strong action to spur consumption, investments and exports will take the GDP growth rate much higher and this is the right time for India to think big and envision GDP growth rate of 10% to greatly improve development outcomes, he said. 

On the US withdrawal of Generalised System of Preferences for Indian exports, Kirloskar said it will hurt domestic industry. “The issue of GSP has been done in a little bit of haste…It is certainly going to hurt us, especially small item exporters,” he said, adding that the retraction of benefits would impact business in both India and the US. 

“It (GSP) is boosting the competitiveness of US manufacturers by lowering their cost. About two-thirds of US imports are under GSP programme and they are raw materials or components to manufacture goods,” said Kirloskar, adding that he was hopeful that the new foreign minister would be able to resolve issues around GSP with his American counterparts. 

While pointing at the need for lower interest rate to stimulate the economy, CII president designate Uday Kotak highlighted the need to improve transmission of interest rate cuts by reducing distortions in the lending market. 

Kotak said that public provident fund and other government small saving schemes were offering interest rates of 8-8.5%, while the deposit rates offered by most banks were in the 7% to 7.4% range. 

“If we want to reduce the cost of money, we need some clarity on how we in the system reduce the deposit costs to be able to give lending rates which are more attractive.” The CII has also suggested that leaders be appointed to push growth in high employment generating sectors such as tourism and healthcare 

Source : Financial Express