ECONOMIC POSITIVITY - YET TO TAKE MOMENTUM

The Indian economy has although signaled positive sentiment but the tangible results in various economic sectors are still to be seen. The Wholesale Inflation Index is negative, the Retail inflation is in control at around 4%. The Foreign Exchange Reserve have reached a record level of more than US$350 billion. The economic mood is positive but the real momentum of growth is yet to pick up. The Bank Credit off take, Steel & Cement Production, the Core Sector growth, Index of Industrial Production, Agricultural growth are all yet to take off. Even the service sector growth is in close range. The Sensex has gained but the market cap gain is still not widespread across the sectors. The capital market sentiment are positive but not upbeat.The recent announcement of 0.25% reduction in repo rate has been far from adequate to bring fuel to the economic growth. The Indian Industry and Services sector need supportive hand of the RBI and the Government to enable them to come out of lack luster growth and gain momentum. It may be necessary to take some risk and aggressive approach to incentive's Indian economy towards growth with substantial reduction in interest rate and adequate availability of credit. The small and mid- size sector is severely suffering as now no Bank or financial Institution is ready to lend without collateral security. Financial Development Banking Institutions are needed at national, state as well as district level. The bankers have become too apprehensive of NPA. The Non-Performing-Asset determination criteria have been quite strict and the increased NPA ratio has created a severe sentimental impact on the entire credit system.These aspects of banking need a complete fresh look. More than 80% of Non-Performing-Asset can be brought back to revival and growth. It is important for Ministry of Finance & RBI to look into specific issue of each sector and provide them supporting hand.The Finance Ministry needs to announce very clearly that the credit decision will not be subjected to vigilance or CBI review except in case of clear evidence of corruption. It is important for government to encourage Banking Professionals to take calculated business risk and to have a Positive Aggressive Approach rather than a Negative Conservative Approach. The Black Money Act in relation to declaration of Foreign Assets and Income has several aspects which will negatively impact genuine businesses as well as salaried class. The rule making and procedures need to ensure fair treatment and not too much bureaucratic controls as it may lead to deep corruption in view of steep penalties. The Benami Assets Bill will also need an open debate. We need to ensure that adequate space is available to the businesses with adequate liberty and means of capital creation and pooling. The unnatural restrictions in Section 56 of the Income Tax Act and severe compliance's in the Companies Act have already scuttled growth of businesses.
Employment Generation
The Government needs to initiate the SME sector growth, Agriculture sector growth, skill development and other initiatives to boost employment. The focus has to be on all around growth rather than only on Black Money and Corruption. The wealth generation in the hands of poor and needy can be achieved only by economic activity built up. The tax collection can also go up only by substantial reduction in tax rates so that Indian Public voluntarily work more and more in official economy.
GST Rates
The proposed GST rates above 20% will bring a big disaster and will push the traders as well as manufacturers towards unrecorded transactions and will defeat the very purpose. The government need to ensure that rate of tax is less than 16% for State and Central Government put together.
CSR Scheme
The CSR activities of Private Sector as well as Public Sector need to be determined and freely approved by the shareholders. The government intervention to direct the CSR funds towards GANGA Cleaning or Swachh Bharat Abhiyan may negatively impact the real intent of CSR initiative.
The Gold Monetization 
The Gold Monetization Scheme is in its formative stage and could be a major initiative to positively restrict Gold import and channelize the gold lying with household and businesses to its productive use. In case an attractive interest rate could be worked out or alternatively, subject to a lock in period, the sources of gold up to a particular quantum per person could be given an amnesty from taxation, this scheme can bring good result.
Bold Initiatives
The Government needs to concentrate on real bold initiatives and rather than announcing these loudly, it is the time for bold action in:

• Major tax reforms reducing harassment and abuse of power
• Major relaxation in Corporate laws
• New Technology for Agro sector
• Infrastructure Development

The list could be long but the message is clear that the Government need to create an atmosphere for all to act without fear of Criticism and act aggressively like in Coal sector auctions.The time is to deliver without making any noise.