Global turmoil has jeopardised India Inc's growth potential: FICCI

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New Delhi, Nov 2 (UNI) The Federation of Indian Chambers of Commerce and Industry (FICCI) today dished out its agenda before the government for high growth on a sustained basis, including pushing up investment in infrastructure projects and steps to restore investor confidence.

In a study entitled 'Restoring the growth momentum and bringing back investor confidence,' the Federation says the Indian economy and Indian businesses are at the critical crossroads.

''Firm and decisive policy actions are required at this stage to address the growing crisis of confidence and put the economy back on the steady growth path for the next coming year,'' the study says.

The study is to be presented to Prime Minister Manmohan Singh at a meeting that has been convened by him with the captains of industry.

FICCI will be represented at the meeting by its President Rajeev Chandrasekhar.

The study advises the government to bring the focus back to growth and not adopt a "half-hearted shared approach between tentative growth and monetary policy driven inflation management.'' The study, to be presented to the Prime Minister, is in an expansion and a continuation of its earlier document on the same subject released recently to the media.

Significanlty, FICCI is the only chamber which shelled out details about what it will tell the Prime Minister, the other chambers were tight lipped about the wherewithal that they will be speaking before the Prime Minister.

FICCI said the focus on the financial sector was important but not enough. Problems pertaining to the downstream real sector-- large and medium industries and exporters--need to be addressed to ensure that there was no damage to the real economy.

FICCI said the industry leaders would want to know from the government as to how it envisages maintaining the growth momentum during the Eleventh Plan period.

The Federation noted that growth so far has been primarily private investment driven and this trend needs to be sustained.

FICCI said the the fundamentals of the Indian economy remain structurally strong and the current global banking crisis has left the Indian banking sector relatively untouched.

However, many months of tight monetary policy and its consequential effect on drying up domestic liquidity has forced Indian companies to look externally for financing.

FICCI said this forced and increased international exposure has seriously compromised the Indian industry's interest largely on account of turmoil in the international financial markets and the rapid devaluation of the Indian rupee.

In addition, the risk aversion that has suddenly crept into the domestic banking sector on account of international banking crisis has created a situation of deep concern and threat for the real economy and the players involved in it.

FICCI claimed that the government has finally yielded to their suggestion to step up liquidity infusion undertaking the rate cuts and opening up further the External Commercial Borrowings (ECB) route.

The FICCI study says the reason to take deeper and more meaningful measures is simple. India is in the middle of significant investment and expansion cycle, where businesses need excess to capital--both equity and credit.

Disruption of this expansion cycle mid-stream will have serious consequences for the real economy, the study adds.


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