CII president Venu Srinivasan (right) with director-general Chandrajit Banerjee in Mumbai on Wednesday. (PTI)

Mumbai, April 22: Venu Srinivasan, president of the Confederation of Indian Industry (CII), expects the clawback to start after September.

Badly roiled by a deepening financial crisis that sparked a recession in the West and a demand slump at home, industry saw growth in output shrink 1.2 per cent in February from a year-ago level.

Srinivasan reckons that the turnaround can begin sooner than most people think. But any chance of an industrial revival is predicated on the assumption that the new government will continue with the efforts to pump-prime the economy with another set of stimulus measures and the Reserve Bank of India will pare rates by another 25 basis points.

The RBI trimmed the short-term benchmark rates — the reverse repo and the repo — by 25 basis points on Tuesday, but the CII believes that it should slash rates more aggressively. The CII president said the repo should be brought down to 4.5 per cent from 4.75 per cent at present and the reverse repo to 3 per cent from 3.25 per cent.

Outlining CII’s theme for the year 2009-10, Srinivasan said the new government should focus on the next level of reforms. Besides creating an environment that would foster greater foreign direct investment, he felt that the new government should consider divesting its stake in a range of public sector units.

“We also need procedural reforms at the state level,” he said.

Srinivasan presented his wish list for the new government: lower indirect taxes, bring down personal income tax rates, slash interest rates on export credit and impose legitimate anti-dumping duties.

The big worry is the fiscal deficit which ballooned 145 per cent to Rs 3,26,515 crore in the revised estimates for 2008-09 — or 6 per cent of the GDP — from Rs 1,33,287 crore in the budget estimates. Srinivasan felt that the only way to deal with a burgeoning deficit was to monetise it.

He said the first shoots of revival were already visible in certain sectors such as the capital goods industry.

One way to spur economic growth was to funnel investments into infrastructure that would then spark demand in sectors such as steel, cement and construction services. It would also provide large-scale employment to unskilled and semi-skilled workers.

He said industry wanted the new government to also come out with a detailed roadmap on the unified goods and services tax (GST) that is due to be introduced from April 1 next year. “We would like to see GST at a single rate,” he said.