R.K. SEN, Director General, Merchants' Chamber of Commerce

Expectations of MCC – Some Issues

1. Stimulus package given to exports like interest subsidy, higher duty refunds etc. in October 2008 should not be withdrawn, as positive growth in exports and manufacturing is not uniform. The sectors like Engg., Textiles & Leather are facing rough terrain and need incentives to recover on a sustainable basis.

2. Lending rates of Banks should not be raised in order to keep costs under control and products competitive in the world markets. Ways should also be found to increase credit-flow into the SME sector and cut down their transaction costs. A Mechanism may be devised by RBI urgently to streamline credit-rating norms by all nationalised banks on a uniform basis. For the SME enterprises, credit rating norms should be relaxed, as an incentive for their rapid growth.

3. Prices of energy-inputs like Petrol, Diesel, LPG etc. for industries should not be raised at a time when the economy has just started recovering and high inflation is visible in the economy. Prices of Food articles have shot up by 20 p.c. and any inflationary step will upset the recovery process, decelerate economic growth and lead to serious hardship for the common people.

4. Fiscal deficit which has crossed 6.8 p.c. of GDP now should be reduced and kept down to around 4 p.c. To achieve it, government should cut down non-Plan expenditure drastically, effectively plug all loopholes to avoid time-and-cost over-runs in the execution of Plan projects and substantially increase the disinvestment amount.

5. Food inflation is posing a serious problem. Both short-term and long-term measures need to be taken to overcome this crisis and build-up a strong base for long-term food security. Agricultural investment must be stepped up – in roads & transport linkages, irrigation facilities, seeds – soil treatment – manures – pesticides, storage facilities & Cold chain etc. To improve the current supply management aspect, imports of essential items in short production, backed by an effective Distribution System and target-based Rationing should be adopted to tackle the present crisis.

R.K. SEN
Director General
Merchants' Chamber of Commerce
Kolkata
merchantchamber@yahoo.com