August 27, 2012
Bangalore — India Inc is in favour of investments in equities and mutual funds than in gold to improve the balance of payments (BoP) and reduce the country's high current account deficit, a top industry representative said Monday.
August 27, 2012
Bangalore — India Inc is in favour of investments in equities and mutual funds than in gold to improve the balance of payments (BoP) and reduce the country's high current account deficit, a top industry representative said Monday.
"We are happy to know that Finance Minister P. Chidambaram wants to encourage investments in equities and mutual funds, as investments in gold has deteriorated the balance of payment and widened the current account deficit," Confederation of Indian Industry (CII) president Adi Godrej told reporters here.
Stressing that a conducive environment was essential to improve investments in growth-oriented sectors, the Godrej group chairman said as raising equity was a part of domestic investment, the government should create favourable conditions to attract investments in equities and mutual funds than in gold and help improve the balance of trade (BoT).
"The investment climate has suffered in the country due to poor returns from the stock market. High interest rates have also been a dampner for new investments. The RBI (Reserve Bank of India) should decrease the interest rates (repo and reverse repo) and the cash reserve ratio (CRR) to strike a balance between growth and inflation," Godrej asserted.
High cost of imports, especially crude oil and gold widened the current account deficit to a whopping 4.5 percent in last fiscal 2011-12 from three percent over the years.
According to the central bank (RBI), at 4.2 percent of the gross domestic product (GDP), the current account deficit was at an all-time high level in last fiscal, accounting for $78.2 billion, as value of imports was more than exports even after considering cash remittances and payments made.
Gold imports last fiscal has been estimated to be about $60 billion.
Admitting that the general investment climate had deteriorated over time, especially after retrospective tax amendments were proposed in the Union budget for this fiscal (2012-13), Godrej said even Prime Minister Manmohan Singh had identified them as a cause for negative perception prevailing in the country.
"The labour incident in Maruti car plant at Manesar (in Haryana) also led to negative perception as it reflected the social unrest brewing in the country for various reasons. The government should take immediate action to remove this negative perception," Godrej observed.
Referring to the measures Chidambaram has taken to revive the economy since he took over as the finance minister early this month, the leading industrialist said had the government taken these steps much earlier, they would have created a positive impact on investment plans.
On land reforms, Godrej said India Inc was in favour of sensible policies in the acquisition of land for industrial activity to fuel economic growth and fair return to farmers.
"Total land required for urbanisation or industrial production is just five percent of the total agricultural land. Though not a major issue, we have to be fair to farmers when the land reforms Act is amended, keeping in view their welfare," Godrej asserted
Courtesy: IANS
