The Central government's Food Security Bill (FSB) that is expected to cost the country about Rs 1.25 lakh crore annually, got a thumbs down from trade body Federation of Indian Chambers of Commerce and Industry (Ficci), whose president Naina Lal Kidwai called it “troublesome” and questioned the very necessity of it.
Addressing reporters here after the national executive committee meeting of Ficci, she said, “Ficci does not support FSB. Do we need it in the current way is a big question. We support cash disbursal (an apparent reference to direct benefit transfer) on the basis of Aadhaar number. Beneficiaries should be given money so that they can use it for what they want.” FSB puts pressure on the exchequer and inflates fiscal deficit, she added.
On expectations from the July 30 monetary policy review by the Reserve Bank of India (RBI), she said, “We fear interest rates could go up in view of the limit on LAF. If that happens, (liquidity adjustment facility).”
With effect from July 17, the RBI restricted funds under liquidity adjustment facility or LAF to one percent of their net demand and time liabilities, reckoned at Rs 75,000 crore. It was aimed to squeeze liquidity from the system, but according to experts, has the unintended consequence of raising interest rate.
Quoting Ficci's recent “Economic Outlook Survey,” she said, “We need lower interest rates to kick-start investments. Also, transmission of rate (cut) from RBI to banks has not yet happened.”
Reflecting a sort of desperation, Naina said that in the short term, India needs foreign institutional investment to address the burgeoning current account deficit. “Whichever way it comes, we want the money.”
A survey jointly done by Ficci and EY (formerly Ernst & Young) on “Bribery and corruption: ground reality in India” was released by her during the press conference.
The survey found that 83 per cent of the 200 respondents felt that recent spate of scams adversely affected FDI inflows into the country, especially in real estate, infrastructure, metals and mining, and aerospace and defence.