The Associated Chambers of Commerce and Industry (Assocham) has urged the government to set up a Rs1 trillion (Rs 1,00,000 crore) 'revolving fund' to assist infrastructure firms to weather the global meltdown.
"Assocham has mooted a proposal for constitution of Rs 1,00,000 crore revolving fund to assist infrastructure firms to hike their activities to beat current meltdown in economy...," said Assocham in its mid-year economic review. A revolving fund is a fund or account whose income remains available to finance its continuing operations without any fiscal year limitation.
"Several private sector projects in sectors such as automobile, transportation, fertiliser, refineries and oil and gas exploration, face capital shortage," Assocham said.
Fall in corporate profitability has affected flow of savings into the capital market which has seen withdrawal of $13 billion since January, 2008.
"Industry now looks forward to second tranche of measures by the government for stimulating the economy," the review added. Industrial output in October contracted by 0.4 per cent and exports plunged by 12.1 per cent.
On the services sector, which accounts for 55 per cent of the GDP, it said the segment should not be allowed to flounder in the wake of global downturn and loss of domestic output.
About worsening employment situation, the chamber said increasing investment in infrastructure and giving a boost to the labour intensive sectors like textile would help create jobs as answer to the crisis does not lie in blocking job reduction by corporates but helping them through demand creation.
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