New Delhi:  With GDP growth slowing to a nine year low of 6.5 percent in 2011-12, industry today 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," CII Director General Chandrajit Banerjee said.

Demanding bold actions from the government and the RBI 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".

FICCI 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 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 percent, the GDP growth in 2011-12 has been at a lower level than during the crisis period growth of 6.7 percent.

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.

India now a gasping elephant!

Global financial majors HSBC labelled the nation’s economy as a "gasping elephant" while Credit Suisse said latest numbers will send "shivers down" the spines of coalition politicians of ruling UPA.

Putting the onus for the dismal show of the economy on administrative obstacles and policy paralysis, HSBC said while the former have held back key investment projects, the latter has significantly hurt investor sentiments.

"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," HSBC said in a report.

In a veiled attack, Credit Suisse also criticised the policy paralysis, saying, "It (the fall in GDP growth) will inevitably send shivers down the spines of senior coalition politicians, who will no doubt be heaping pressure on the Reserve Bank to react and react aggressively".

Credit Suisse is of the view that the plummeting of GDP growth would put the government in a dilemma on whether or not to raise subsidised fuel prices.

"We had thought it would...but that that has now become a harder call. The move may also be delayed by a month or two," it said, adding that the Reserve bank, in its policy review on June 18, should focus on growth.

HSBC also said that the weaker than expected GDP growth numbers are likely to increase pressure on the Reserve Bank to cut policy rates further.

"... 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".


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