1. ASSOCHAM National Economic Affairs Council Weathering the Current Economic Turmoil - Immediate Policy Agenda MC Meeting, 4 th September 2013

2. ASSOCHAM National Economic Affairs Council 2 Dimensions of Current Turmoil GDP growth: 4.4% (Q1: 2013-14) (Manufacturing: -1.2%, Services: 6.6%, agrl.:2.7%) GDP growth: 9.5% in 2010-11, 6.2% in 2011-12, 5 % in 2012- 13. Wage growth surpassed labour productivity growth during 2008-09 to 2010-11, possibly adding to inflation pressures Contd..

3. ASSOCHAM National Economic Affairs Council3 Dimensions of Current Turmoil (contd..) The short fall of domestic savings to domestic investments i.e., savings-investment gap, increased from -1.3% in 2007- 08 to -4.2 percent in 2011-12. Value of industrial investments proposed came down to Rs. 3.2 lakh crore between Jan-July 2013 as against Rs. 4.4 lakh crore in Jan-July 2012 Thus, the effect of industrial reforms, introduced in 1990s, has by now visibly faded.

4. ASSOCHAM National Economic Affairs Council4 Main Causes of Current Turmoil Fiscal Deficit: 4.9% of GDP( 2012-13). Actuals stood at 62.8% of the budgeted fiscal deficit between April-July 2013. The benchmark 10 year Government security yield is hovering at 8.6 percent. The Current Account Deficit stood at unsustainable level of 4.8% of GDP during 2012-13. Retail inflation is still hovering at double digit level.

5. ASSOCHAM National Economic Affairs Council5 Main concerns Increasing fiscal deficit owing to high revenue deficits that are largely financed by borrowings Low business confidence due to lack of transparent and predictable government policies Skewed inflation where costs input costs are increasing at a higher rate than that of output prices Growing import dependency and high currency volatility causes of concern. High transaction costs and need for process reforms

6. ASSOCHAM National Economic Affairs Council6 Well Known Policy Solutions Reviving Business confidence Creating strong supply response Fiscal stimulus to revive investments Boosting public investment to crowd in private investment Fiscal prudence Revisiting Manufacturing and Exports Strategies

7. ASSOCHAM National Economic Affairs Council7 Formulating policy recommendations with the objective of: Identifying the short-term policy measures having immediate visible effect on economic growth. Short-term policy recommendations in terms of Dos and Don'ts What does industry need immediately so that their top and bottom lines improve? Current Agenda

8. ASSOCHAM National Economic Affairs Council8 Specific Focus Areas Investment and Capital Inflows Industry and Manufacturing Infrastructure Services Foreign Trade Fiscal Policy Monetary Policy

9. ASSOCHAM National Economic Affairs Council9 Provide your invaluable inputs on urgent basis in line with the purpose Making this initiative relevant Need of the Hour

10. ASSOCHAM National Economic Affairs Council10 Thank You