“With tremendous opportunities available in the Indian economy, further strengthening of the growth process and job creation is on the horizon,” said Ms Shobana Kamineni, President, CII, while addressing the media today. The reform agenda has picked up with substantive policies such as the goods and services tax (GST), insolvency and bankruptcy norms, FDI liberalisation and ease of doing business being implemented. Conditions are positive for an economic recovery in the current year, with GDP growth expected to lie in the range of 7.5-8.0 per cent.
“One of the key priorities for CII this year would be to help revive domestic investment, which has been flagging and the economy has been growing largely on the back of exceptionally high government spending on infrastructure, etc” Ms Kamineni said.
“Industry is completely ready for the introduction of the landmark tax reform from July 1, 2017. CII has been calling for a single national tax for the last ten years and we will try to make its implementation as smooth as possible,” said the CII President.
Going forward, “it is possible to target 1 per cent additional growth each year to reach 10 per cent in the next three years. The drivers for this step up in growth would include the benefits from implementation of GST, greater participation of women in the labour force, the urbanisation process which will drive greater economic activity in areas such as construction and government spending of up to Rs 30 trillion in various infrastructure projects over the next few years” Ms Kamineni added.
A CII estimate shows that the entire construction sector can add 30 million jobs in the next ten years. These projects will also provide essential connectivities for enhancing opportunities for income growth. Total spending of Rs 30 trillion is envisaged over the next 4-5 years under projects such as the investment program of the Indian Railways, 20,000 kilometers of highway building under the Bharatmala project and Sagarmala for port-led development. “Our conservative forecast is that based on these projects, India’s GDP could increase by as much as 50% over the next five years. Similar increases in job creation can also be expected” the CII President opined.
She added that “it is eminently possible to create 5 million jobs each year, if the GDP growth rate can be boosted by an extra 1%. CII’s analysis shows that as of now, we are creating about 3.7 million jobs annually. 10-12 million people enter the working age population every year. Of these, about half actually do not look for jobs as they prefer to go into education or other activities. CII’s intensive skill development activities are ongoing and are designed to enhance the employability of the workforce.”
For the economy to move to a higher growth path, the slowdown in investments must be reversed. Consumer demand has been improving across sector and this should lead to higher capacity utilisation and further, to capacity expansions soon. A good monsoon would further boost rural demand. Solution to the NPA issue can no longer be postponed. We are encouraged by the package approved by the Cabinet last night. In addition, CII feels that the current interest rate structure is still too high to induce investments and the RBI must find ways to continue on a downward interest rate path.
“CII would continue to request the Government for quick action in reducing corporate income taxes for all corporates. This has become urgent given the lowering of tax rates across many other countries. The 25% rate is currently applicable only for companies with turnover up to Rs 50 crore. Eventually, the corporate tax rate could be brought down to 18% together with the removal of all incentives. CII believes this will lead to much better tax compliance” the CII President said.
In an effort to achieve the objectives outlined in the theme for the year, CII is also setting up time bound Special Task Forces in the following areas:
- Agriculture Income Tax
- Judicial Reforms
- Cyber Security
- Security and Privacy
- Heal from India
- Justice for Common Man
- How to make India Tax Compliant
- Globalisation: Can India Lead?
4th May 2017