Expressing concern over the moribund state of the domestic economy and with the major macroeconomic indicators yet to show recovery, a Parliamentary panel has urged the government to take urgent steps to support Reserve Bank of India’s initiatives to contain inflation to trigger sustainable growth.
“...There is a visible lack of sync between the fiscal and monetary policy being followed by the government and the RBI. Since, the committee strongly feels that monetary policy alone cannot bring down inflation or spur growth in the absence of commensurate fiscal measures, they urged the government to take urgent steps to supplement and complement monetary measures...,” the Standing Committee on Finance said in the report, Current Economic Situation and Policy Options.
Nothing that there is a divergence in the views of the government and the RBI on price stability and growth, the panel observed that the country cannot expect investments or consumption to pick up for propelling growth unless there is stable inflation regime.
To deal with the current gloomy economic scenario, the committee suggested that government should come out with a well thought-out revival policy to ensure effective decision making, time bound clearance of projects, more transparent tax regime and enhanced domestic investment.
“The committee, therefore, urges upon the government to take clear cut measures in this direction and implement them speedily and without fail,” the report said.
On the issue of investor sentiment getting hit by retrospective amendment to tax laws and the new General Anti-Avoidance Rules (GAAR), the panel said that the government needed to create conducive climate to promote investments.
The panel has also sought speeding up enactment of pending financial sector reform bills like The Pension Fund Regulatory and Development Authority Bill, 2011; The Insurance Laws (Amendment) Bill, 2008; The Banking Laws (Amendment) Bill, 2011; The Prevention of Money Laundering (Amendment) Bill, 2011; The Direct Taxes Code Bill, 2010 and The Companies Bill, 2011.