India needs 'economic revival package': business
India urgently needs an "economic revival package", a leading Indian business group said Monday, adding the government was running out of time to spur growth. The Confederation of Indian Industry's call, which was echoed by other business groups, came after India recently posted 5.3 percent quarterly growth -- the slowest in nine years -- down from scorching nine percent-plus expansion a few years ago. "Macroeconomic conditions are worsening at a faster pace than anticipated and we need to stem this," said CII president Adi Godrej, in a stark warning to the Congress party-led government about the state of Asia's third-largest economy. "I am requesting that an economic revival package be announced" by the government and the central bank, Godrej said in a meeting with C. Rangarajan, chairman of Prime Minister Manmohan Singh's Economic Advisory Council. Singh, a former World Bank economist lauded as architect of India's reform process two decades ago, recently took personal charge of the finance ministry after Pranab Mukherjee quit to run for the mainly ceremonial role of president. The CII chief's statements coincided with a report by the Paris-based Organisation for Economic Cooperation and Development that said India and China were slowing faster than advanced economies. While the West would envy India's five percent-plus expansion, experts say the nation needs to grow much faster to lift hundreds of millions of Indians out of poverty. Godrej, a billionaire who heads Indian consumer goods giant Godrej Group, said he knew the government's room for manoeuvre was limited with India battling to curb gaping fiscal and current account deficits. But unless the government and central bank act now, he said, "a few months down the line the economy would probably go beyond the threshold where any credible intervention could salvage it." The government must implement long-delayed reforms such as opening up India's retail sector to more foreign investment, Godrej said. It also needs to overhaul its tax system to bring in more revenue and boost business confidence. Even with India's stubbornly strong inflation, the central bank should ease high interest rates, Godrej added, noting China had reversed its tight credit policy to spur growth and investment. "I can hardly overemphasize the importance (of such moves) at this juncture," said Godrej. However, the prime minister's economic advisor Rangarajan said India's deficit woes meant the government has "no scope" to provide the massive stimulus it gave in 2008-09 when the global financial crisis erupted. The meeting with Rangarajan followed a cover article by US magazine Time that said India's economy "needs a reboot" and branded Singh, 79, "The Underachiever". Singh's reputation has taken a beating during his second term as premier amid a string of corruption scandals and charges of policy drift. But since taking over the finance ministry he has vowed to revive the economy's "animal spirit". The Time article drew a strong response from the Minister for Overseas Indian Affairs, Vayalar Ravi, who called it a "a frontal attack" on the prime minister and said the "criticisms are not acceptable to the government of India".
