COMMENTARY
INTERVIEWS
SPECIALS
CHAT
ARCHIVES

Businessmen seeks economic agenda from political parties

Pooja Bahuguna in New Delhi

Two chambers of commerce have made a fervent appeal to all the political parties to spell out their economic agenda in their respective manifestoes to give a clear direction to the future economic development of the country.

The Associated Chambers of Commerce & Industry of India -- ASSOCHAM -- and Federation of Indian Chambers of Commerce and Industry --FICCI -- have released their economic agendas and have urged political parties to adopt the same and implement as much as possible when they form the government.

Assocham President L Lakshman said the objective of the exercise was to secure broad national consensus on economic policies so that economic development did not suffer on account of political instability. Industrialists, Lakshman said, were meeting leaders from all political parties to convince them to include the economic agenda in their respective manifestoes.

He said while it was gratifying that a broad consensus had emerged on the need and direction of the economic reforms, implementation had slowed down because of divergent political postures. He said it was imperative that political parties of all hues set for themselves a common agenda to actualise the country's "potential to emerge as a global economic power."

In its economic agenda, ASSOCHAM has fixed the target of growth for gross domestic product at around 8 per cent over the next five years, with industrial, agriculture and service sectors growth of 11 per cent, 4 per cent and 10 per cent respectively. In its paper, ASSOCHAM has also fixed a target for gross domestic savings at 30 per cent of GDP and reduction of fiscal deficit to 2.5 per cent by 2003.

It has suggested that political parties rationalise subsidies through better targeting and introduce a time-bound plan to reduce aggregate subsidies to five per cent of the GDP by 2003. It said the revenue generated through fiscal deficit should be used only for plan expenditure and subsidies, and the government should evolve an effective delivery mechanism to reach the targeted group.

The paper has suggested the restructuring and redeeming of public debt so that the interest burden, as a percentage of tax revenue, progressively reduces to 40 per cent within the next five years from the present 60 per cent. It said the government should set a legislative cap on government borrowing to make available more funds for the private sector.

FICCI, in its prescription, has suggested that political parties seeks the people's mandate in the coming election on the role of the government in developing the country's infrastructure. It said the next government should raise the expenditure on public works, housing and infrastructure to stimulate demand for core sector products like cement and steel, which would have a multiplier effect on demand and the job market. FICCI said this is required to revive industry, which is facing a slowdown for over a year now.

While underlining the need for maintaining the quality of fundamentals such as a reasonable rate of inflation, fiscal deficit, etc, FICCI contended that these should not be achieved by stifling the demand generation at this crucial juncture when industry is facing one of the worst slowdowns in recent years. FICCI said there is a need to pump in more money for infrastructure projects by the government even at the cost of a slight increase in the fiscal deficit.

FICCI has suggested a freeze on the current import duty rate for a period of two years. It said a further reduction in import duties should be linked with improvement in the investment climate, which should include reduction in cost of finance, energy and other inputs.