NEW DELHI: The government should step up expenditure to spur consumption and improve ease of doing business to rev up the economy, new FICCI president Sangita Reddy said on Tuesday.
Reddy, who is the joint managing director of Apollo Hospitals, also said that the government needed to focus on “clusters,” besides undertaking labour reforms, to boost manufacturing in the country. “To spur consumption, we need to put money into the system.
Our recommendation to the government is to infuse Rs 1.5-2 lakh crore at the very minimum into the economy,” Reddy told ET in an interview, while adding that the fund infusion — which must be used to boost demand in rural economy - can be backed by a time-bound disinvestment plan of about Rs 3 lakh crore, which will expand fiscal deficit only temporarily.
India’s economy is forecast to grow 5% this fiscal, its slowest pace in eleven years, according to the first official advance estimates released last week.
The government must address unsold inventory in real estate and transfer overdue payments to corporates.
Front loading of transfers and subventions, including via the PM Kisan project, could provide a “kicker effect” to the economy at a time when all indices show a fall in discretionary spending in rural areas, Reddy said.
Toboost demand in the real estate sector and reduce inventory of unsold houses, Reddy suggested that the government should provide a front end reduction in interest rates for housing loans in the first two years.