Goods and Services Tax Holds Key to Growth

The Goods and Services Tax (GST) is a reforms initiative that seeks to replace all indirect taxes levied on goods and services by the Centre and States and make it comprehensive for most goods and services. Some of the States have been resisting it on the ground that it would infringe on their financial autonomy.

CII feels that introduction of the contentious GST is a high priority area for the country to improve its economic growth and gross domestic product (GDP). It will also exert pressure on the States opposing it to agree to its implementation.

With the CII concluding that accelerated economic growth is vital in the present circumstances, CII’s new President, S Gopalakrishnan, stressed that reforms like implementation of the GST was a must.

“It is a high priority area. If GST comes into force, it will add at least 1.2 per cent to the GDP. We have met several chief ministers and we are hopeful to convince them”, he said.

The CII president said with moderation of inflation rates, check on fiscal deficit and positive outlook on current account deficit suggest that a growth percentage of around 6.2 per cent was achievable in 2013-14.

Economy Matters – April 2013 Updates

Economic signals from China indicate continuing slow recovery which has been one of the main reasons for the current moderation seen in global commodity prices.  In other global developments, European Central Bank (ECB) cut its key interest rate to a historic low in a bid to pull the region out of economic uncertainty. We discuss this in detail in the section on Global Trends in this month’s issue of Economy Matters.

In the section on Domestic Trends, we dwell into the fine-print of the recent RBI’s monetary policy review held on May 3^rd, 2013, which saw the Central Bank cutting the repo rate by 25 basis points. CII, however, would have been happier if RBI had obliged with a larger rate reduction supplemented by a reduction in CRR too.

The results season has started and the early trends point to a continuation of sluggish growth in net sales, though profit margins seemed to have improved due to waning expenditure costs. More on this, in the section on Corporate Performance.

The Sector in Focus for this issue is Steel, which remains crucial in aiding economy’s growth performance. Our analysis shows that the sector’s future prospects are critically hinged on ensuring adequate supply of raw materials.

In the Special Article, we analyze the current domestic investment scenario using data on projects implementation status from CAPEX database.  Our analysis shows that the investment scenario hit rock-bottom in 2012-13. There has been an increase in stalled/shelved projects, while new projects have declined. Unless there is a concerted effort to plug the projects implementation gap, economic recovery will continue to remain distant.

Click to Download: Economy Matters_April 2013

CII’s agenda is to accelerate economic (GDP) growth to 6 – 6.5 percent this year and to take it to 8.5 – 9 percent as quickly as possible

The drivers for growth would be reforms and governance, inclusive growth and affirmative action, innovation, entrepreneurship and growth of MSMEs and transformation of sectors: S Gopalakrishnan, President CII

India ranks 132nd among 185 countries on the parameter of ‘ease of doing business’; this needs to be improved: S Gopalakrishnan, President CII &  Co-Founder and Executive Co-Chairman, Infosys Limited

CII Members’ Interactive Meet with Mr S Gopalakrishnan, President CII took place here today. Addressing the meet, Mr Gopalakrishnan, informed the audience that CII theme for 2013-14 is “Accelerating Economic Growth through Innovation, Transformation, Inclusion and Governance”. He said, “Our agenda is to accelerate economic (GDP) growth to 6 – 6.5 percent this year and to take it to 8.5 – 9 percent as quickly as possible. “ He further added, “The drivers for growth would be reforms and governance, inclusive growth and affirmative action, innovation, entrepreneurship and growth of MSMEs and transformation of sectors.” On the front of reforms and governance, he highlighted that the World Bank Report indicates that India ranks 132nd among 185 countries on the parameter of ‘ease of doing business’. This needs to be improved. Further, FDI should be encouraged wherever applicable in a phased manner. With reference to GST implementation, he also informed that it has been a top priority of CII to play an active role in creating the right atmosphere. He also highlighted that CII has been active on facilitating distribution reforms in power sector, model APMC Act, leveraging technology for strengthening MSMEs, the Companies Bill, Land Acquisition Bill, etc.

Mr S Gopalakrishnan also briefed the members on CII’s efforts towards the inclusive growth agenda. He informed that CII has already engaged with Dalit Chamber of Commerce and also been active on skill building and employment of marginalized sectors. On the front of innovation and entrepreneurship, CII efforts are on to popularize the job portal http://www.thefairjob.com linking industry with job seekers from marginalized sections. In transformation of sectors, President CII informed that this year CII would be starting a three year project called Project Village Budha which would be targeted to implement the idea of Kaizens (small improvements) in a village environment. Further, ‘Visionary Leaders for Manufacturing Programme’ of CII would help 100 top MSMEs to improve on their current size and status. Mr Gopalakrishnan, concluded his remarks by saying, “We will also continue our focus on global engagement and sustainability.”

Retail FDI, a game-changer

The announcement on notifying 100 per cent FDI in single brand retail, and opening up multi-brand retail to FDI is a welcome move, and sparks hopes of restoring investor confidence and attracting more funds from overseas. It is worth reiterating the benefits expected from this move.

To read more: http://cii.in/WebCMS/Upload/HBL17Sept12.pdf