Assocham suggests Rs1,00,000 crore infrastructure fund
29 Dec 2008
The Associated Chambers of Commerce and Industry of India (Assocham) has proposed a Rs100,000 crore revolving fund to help infrastructure firms beat current downturn.
Such a fund would help draw increased investments from concerned stakeholders for infrastructure projects, Assocham argued in its mid-year economic review.
''Several private sector massive investment projects in steel, auto, transportation, fertiliser, refineries and oil and gas exploration sector currently face severe capital shortages .... the suggested fund would be an ideal way out to release a portion of funds to their promoters to execute them with their internal accruals,'' Assocham said.
While the fall in corporate profitability has already affected flow of savings into capital market, the release said, this has led to withdrawal of $13 billion from foreign portfolio investment.
Assocham also welcomed the government's move to raise foreign investment (FDI) limit in the insurance sector to 49 per cent, as there is a large population still not covered by insurance.
The chamber has welcomes moves in the direction of boosting boosting private investment in infrastructure as well as increased public investment in it.
''The economy is mostly in the manufacturing sector where the slowdown in demand and a fall in export orders have combined to bring down output growth to a negative level for the first time,'' it said, adding, ''Industry now looks forward to second tranche of measures by the government for stimulating the economy.''
To save employment levels from not falling, the chamber suggested that instead of blocking job reduction by corporates, as has been suggested by the ministry of labour and employment, the government should enable corporates to remain afloat at high levels of employment and output through demand creation measures.
''Service economy already accounts for some 52 per cent of the GDP. It should not be allowed to flounder in the wake of global downturn and loss of domestic output,''aid.
In this connection, Assocham suggested high levels of infrastructure investment and enabling labour intensive sectors like textiles, gems and jewellery, leather and the service sector to overcome the current problems they face are critical aspects of the stimulation package the government is expected to announce in the next few days.
''At the same time, individual industrial units should be enabled to fine tune their staff requirements to changing demand patterns and rapidly changing technological compulsions; otherwise the increasing number of sick units would only defeat the objective of maintaining and expanding high levels of employment,'' it noted.
The policy aim should be to expand aggregate employment through more investment and extended manpower training programmes in tune with changing technologies, it added.
