Stung by the gross domestic product growth slowing to a nine-year low of 6.5 per cent in 2011-12, industry on Thursday demanded a revival package to put the country's economy back on higher growth path.
"A comprehensive 'Economic Revival Package' has to be announced at the earliest," Confederation of Indian Industry director general Chandrajit Banerjee said.
Demanding bold actions from the government and the Reserve Bank of India exclusively aimed at salvaging the economy, the chamber expressed hope the political leadership, across party lines, would converge and their actions would be 'swift and decisive'.
Adi Godrej, chairman, Godrej Group, said the message was clear: "We have to work doubly hard to revive growth.
For that a number of things have to be done: The reforms process should be given top priority, subsidies should be cut and foreign direct investment in various sectors should be allowed.
Above all, politics must not be allowed to come in the way of all this," he added.
V N Dhoot, chairman and managing director, Videocon Industries, was a bit more optimistic, saying India's GDP growth of 5.3 per cent in the March-quarter was better, compared to what's happening globally.
"But I think we need to work to restore the confidence of foreign investors in India's growth story.
"We have to manage both our fiscal deficit and current account deficit better," he added.
Federation of Indian Chambers of Commerce and Industry said the current global situation remains fragile and there is an urgent need to take steps on the domestic front to guard against uncertainties.
Seeking 'immediate corrective actions', Assocham president Rajkumar Dhoot said: "Investment environment should be improved and this may even call for some review of tax proposals and further relaxation of FDI norms."
He said fall in the growth numbers would have impact on employment generation.
CII said repo rate and cash reserve ratio CRR cuts are called for from RBI as also measures from the government to kick-start the investment cycle, since growth in capital formation has been negative for the last few months.
At 6.5 per cent, the GDP growth in 2011-12 has been at a lower level than during the crisis period growth of 6.7
Industry was of the view that the Centre and state governments have to work in tandem to ensure that major projects that are held up are put under implementation mode within one month.
Global banking giant HSBC on Thursday termed India a 'gasping elephant', as the slowdown in economic growth was 'deepening' and the downside risks to the outlook had increased.
In a research note, HSBC said the slowdown in growth has proven deeper than expected and blamed administrative obstacles and policy paralysis for the same.
The decline in growth was witnessed in almost all segments of the economy, including agriculture, manufacturing, mining and construction.
"Administrative obstacles have held back key investment projects and the much talked about policy paralysis has significantly hurt investor sentiments and added to the negative external spill overs trough the finance channel," it said.
Going ahead, the downside risks to the economy have increased as policy paralysis in the country is not likely to ease anytime soon.
"With policy paralysis not likely to ease any time soon, however, India may have to settle for sub-par growth and elevated inflation over the next couple of years," the HSBC report said.
Slowdown in investments has significantly lowered the growth potential of the economy and to boost growth over the medium term, India needs deep supply side reforms but with the given administrative bottlenecks.
"To lift growth more notably, going ahead India needs more traction on deep supply side reforms, which will lift potential growth over the medium term.
"This will also help lift growth in the short term by improving sentiments and, thereby, the private investment cycle," HSBC said.
The weaker than expected GDP growth numbers are likely to increase pressure on the Reserve Bank to cut policy rates further.
However, the lingering inflation pressures suggest that monetary policy cannot be eased aggressively.
" . . .traction on deep rooted structural reforms is needed to significantly improve the inflation-growth trade-off in the short as well as medium term," HSBC chief economist for India & Asean Leif Lybecker Eskesen said, adding that the RBI will have to approach any further easing with 'caution'.
