At the threshold of the new financial year, when the budget is all set to unravel myriad policy parameters by this month end, there are hopes and expectations that the measures enunciated for fiscal 2005-06 would make a radical break from the past and create conditions for setting off to a new path of growth.

Indeed, the ground is ready for a pro growth and inclusive budget. This is borne out by the fact that the economy has been showing signs of sustained growth for quite some time now. The growth performance this year has also been quite strong. The Indian economy is expected to grow at 6.9 per cent in the current financial year despite the erratic monsoon suppressing agriculture growth.

The services sector led by the omnibus category of trade, hotels, transport and communications-has consolidated its position as star performer this year. Besides, the manufacturing performance is also surging ahead with nearly all segments growing at a good clip. What is significant here is that the industrial resurgence in the current fiscal (2004-05) is led by the core sector, the capital goods, consumer and non-consumer durables. This gives rise to the optimism that growth in the next fiscal will be sustainable.

It is also interesting to note that, after a decade of stagnation, both saving and investment rates are up in 2003-04. The saving rate has touched an all time high of 28.1 per cent of GDP. The quality of investment is equally impressive with the capital spending well spread out across the economy. With the right policy presumptions and a progressive budget there is no reasons why the investment pick up should not match the historical trends experienced this fiscal.

With the countdown for budget 2005 having begun in right earnest, the Chamber feels that a major priority for the Finance Minister should be to further consolidate the growth momentum of the economy. It is our considered view that recovery should be strengthened by taking measures to increase public investment, especially infrastructure development. This would not only beef up demand for industry and spur growth but would also address the supply constraints that have been holding up industrial growth, bring in foreign and domestic investment and hence boost the sustainability of growth.

Another budget priority could be to give a strategic direction to India's emergence as a competitive manufacturing hub. Hence a thrust to promote excellence in domestic corporate sector through encouragement to in-house R & D has become more a necessity than an option. The Chamber is strongly in favour of direct support in the form of R & D subsidy for specific projects, thus strengthening the competitiveness of domestically owned enterprises.

Above all, the sustenance of robust growth rates would presuppose reining in fiscal deficit, reduction in the cost of capital, making tax incidence predictable and certain and most importantly initiate reform in agriculture and the social sector.

The fiscal 2004-05 has created the right conjuncture for a major push to growth. The Chamber believes that determined action in 2005-06 by pushing through a bold reform agenda in the budget would, indeed, send the right signals in the capital market and further improve business confidence. We have to seize the opportunity provided by the budget to discard old shibboleths if their time has gone. And the time for bold action is now.

I also take the opportunity of reminding you of stepping into the centennial year with the inauguration the Hon'ble Prime Minister Dr. Manmohan Singh on 21st March 2005, which will be followed by other significant programmes both in Delhi and States. I look forward to your full involvement with the Chamber during the year

(K N Memani)
President