Full transmission of policy rates and easy finance to businesses crucial for effectiveness of reform efforts undertaken by government: PHD Chamber

PHD Chamber of Commerce and Industry in the Pre-Budget Meeting with the Hon'ble Finance Minister, Nirmala Sitharaman has suggested to create complementarities in the reforms such as readily availability of land for the industry, time bound single window clearances, full transmission of the policy repo rate, a dedicated fund for the MSMEs, tax reliefs for incremental exports, need for the review/ upgradation of India's FTAs. The President of the Chamber, Dr D K Aggarwal suggested that in order to stimulate domestic as well as foreign investments in the economy, it is essential to enhance the ease of doing business with an effective single window system. The most important reform needed in this regard is to ensure single window clearances of all the government departments / all clearances at one stop in a time bound manner.

He suggested that NITI Aayog may undertake benchmarking of ease of doing business index at the district level. This would help in identifying the problems at the grass root level and result in fruitful outcomes for the businesses. Synchronisation of the economic reforms is a must as we are at a very delicate juncture at this point of time. The ease of doing business at 63 must be complemented by the full transmission of cut in policy rate by RBI to reduce the cost of capital to enhance the competitiveness of the businesses not only in the domestic market but to make them competitive in the international business arena, said Dr D K Aggarwal.

Access to finance is a major roadblock being faced by the industries particularly the MSMEs impacting their competitiveness and growth. The current banking norms result in high primary security and collateral security demanded by banks for the MSMEs which hampers their growth prospects. Further, to address the liquidity crunch in MSMEs, there is a need to set up a dedicated fund of Rs 25,000 crore or more with no collateral being asked for the MSMEs on the lines of fund for stalled housing projects. MSMEs have been facing the problem of delayed realization of their bills and receivables particularly from their large corporate buyers and government organizations for a long time. It is therefore recommended that punitive measures should be introduced against the habitual defaulters who do not meet their payment obligations as per agreed terms maximum in 45 days, said Dr D K Aggarwal.

To kick-start the exports growth trajectory, he suggested increase in export earnings by the exporters on the base of the previous year (year-on-year earnings) should be tax free. To harness the export potential of the country, it is suggested that sectors such as agro and food processing along with dairy products and sea food, automobiles and automotive components, defence including arms and ammunition, parts and accessories, electrical machinery and equipment, gems and jewellery, oil and gas, pharmaceuticals, sports goods, textile garments, handlooms and handicrafts and IT & ITeS must be facilitated in terms of procuring raw materials with concessions in duties, facilitation in production processes etc.

We strongly believe that string of economic reforms undertaken by the government needs to create synchronisation and complementarities in the businesses and manufacturing processes, said Dr D K Aggarwal. He suggested that entrepreneurs must be encouraged to meet their financial needs such as easier and low cost access to credit to encourage them for capital investments. So, full transmission of policy repo rates along with easy and collateral free finance to businesses particularly for small businesses becomes crucial for the effectiveness and fruitfulness of the reform efforts undertaken by the government, he said.

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