With the election results expected during this weekend and the new government likely to be in place within the next few days, there are certain obvious questions which need to be addressed: What would be the broad contours of economic policy and reforms agenda during the next five years for the new government? What would the government do to rejuvenate the economy buffeted by slackening demand accruing from the global economic crisis?

PHD Chamber looks forward to a bold reform stimulus from the new government which would rev up the economy and propel the country towards the path of growth.

The new government will definitely assume office under difficult economic conditions, both on the domestic and the international fronts. Buffeted by the global economic crisis, our economy is showing a subdued performance, industry is in the red, exports have plummeted and employment growth is tepid. Under the circumstances, almost every sector of the economy is desperate for major policy initiatives. Yet PHD Chamber would like the Government to focus on a few issues which deserve priority attention.

The first major challenge before the new government would be to drive growth by reviving domestic demand, strengthening the business climate and improving investor sentiment in the marketplace. For this, it is of utmost importance to evolve a political consensus to revitalise the stalled reform agenda to rejuvenate investment in the economy. The government would do well to put the halting disinvestment programme back on track by approving minority sale of stakes. This would boost the stock market and revive business confidence.

 Also necessary for boosting investor sentiment is the assurance to industry that the Government is committed towards tax rationalisation by phasing out surcharges, FBT etc. A key task of the policy maker is also to outline the detailed roadmap on goods and services tax in 2010 by fixing CGST and SGST rates based on the principle of revenue neutrality. Another signal from the new government would be its commitment to effect fiscal consolidation within a reasonable time by drastically cutting down unproductive expenditure and distortionary subsidies.

PHD Chamber wholeheartedly feels that measures like further cuts in interest rates, ensuring credit flow to industry at reasonable rates and focus on implementation of infrastructure projects. In the case of the later, the government should begin by providing quick financial clearance to pending infrastructure projects. The green signal to projects like Mumbai-Delhi freight corridor will also cheer up infrastructure investors. Urban development and new energy policy are the other areas which need a re-look.

Finally, if India is to fulfill her potential for social and economic development, education and skill development have to improve substantially. Massive reforms are hence urgently required to address the skill gaps. The government should get down to its reform tasks and address the festering bottlenecks to development by focusing on these long neglected policy issues. 

Anjula Singh Solanky
Dy. Secretary-Media Relations
PHD Chamber of Commerce and Industry