New Delhi, Feb. 8: The government must use the budget to pep up investment sentiment in the wake of a disappointing growth projection made for this fiscal by the CSO, leading industry representatives said today.
According to the advance estimate of growth for the current financial year, released by the Central Statistical Organisation (CSO), the growth rate will decline from 6.2 per cent in 2011-12 to 5 per cent in 2012-13, which is much lower than the projections of the RBI and other agencies.
"The number is astonishingly low. Several overriding risks continue to remain dominant and it is important that we firm up steps to give a thrust to the flagging growth. The need to revive the investment sentiment has become indispensable," Naina Lal Kidwai, president of the Federation of Indian Chambers of Commerce and Industry, said in a statement.
Based on data for the April-November period, the CSO has lowered its growth expectations, which prompted the finance ministry to say it will continue with its pro-reform measures to put economic growth back on track. It expressed the hope that the final figures would be better than projected.
"At a time the global economic situation is uncertain, we must take all possible measures to ramp up domestic demand so that our economic performance does not deteriorate any further," Kidwai said.
This would be the economy's worst performance since 2002-03 when just 4 per cent growth was recorded. Since then the Indian economy has been expanding at over 6 per cent, the highest being 9.6 per cent in 2006-07.
The CSO's advance estimate lowered the growth in agriculture and allied activities to 1.8 per cent in 2012-13 compared with 3.6 per cent in 2011-12. Manufacturing growth is also expected to drop to 1.9 per cent this fiscal from 2.7 per cent last year.
Chandrajit Banerjee, director-general of the Confederation of Indian Industry, had views similar to Kidwai. He said the sharp decline in economic growth to 5 per cent was highly disconcerting and validated the perception that the economy was in the throes of a widespread slowdown.
"It is imperative that the investment cycle picks up now. Identify 50 large projects and ensure that these are provided the necessary clearances within a pre-defined period," Banerjee said.
He also asked the RBI to fast track the monetary easing process. "The CII hopes that the Union budget will provide policy directions, which will help improve sentiments and get the economy back on track."
Assocham president Rajkumar Dhoot made a strong plea to Prime Minister Manmohan Singh to call an all-party meeting before the budget session to find a political consensus on key economic issues such as GST and DTC, which are blocking the impetus so urgently needed to revive the economy.
"Let the economy not be a big war for the political parties. I appeal to major political parties to rise to the occasion and avert the national economic gravity, waiting to take place."