It said that the introduction of the GST would be the biggest fiscal stimulus which can improve GDP growth by 1-1/2 percentage points.
The CII revival package proposes, among other things, a cut in the repo rate by 100 basis points, cut in cash reserve ratio (CRR) by 1000 bps, increasing foreign direct investment (FDI) limits in civil aviation and defence, allowing FDI in multi-brand retail and allowing accelerated depreciation for investments in plant and machinery at 25 percent.
The CII expressed concern that low economic growth will affect job creation, inclusive growth and social uplift of people.
Addressing a news conference after the council meeting, CII President Adi B Godrej called for a monetary stimulus by the Reserve Bank of India (RBI) over the next six to nine months to help revive growth.
"Fortunately, inflationary expectations are coming down. Global commodity prices particularly of crude oil have started falling. This is the right time to create the monetary stimulus that can help revive the economy," he said.
Finance Minister Pranab Mukjerjee said that there is no headroom for stimulus.
"GST is the biggest fiscal stimulus that can be provided to our economy. There are a lot of policy changes that can be made, and reforms can be brought about," Godrej said.
He claimed that the finance minister was receptive of many of the ideas they put across during their recent meeting.
"There may be some limitations in the headroom, but India has the option to take things forward. We need greater co-operation between government and opposition, states and the centre, and between business and the government."
The CII president also did not agree that things were beyond control. "There might be some political difficulties in taking some of the steps but it is not beyond control. Unlike Europe, where they don't have any solutions, India has many solutions like GST," he stated.
Godrej said that the objective should be to achieve 7.5 percent GDP growth rate during the current financial year. "It is difficult to predict, but if GST legislation is passed early, it would accelerate," he stated.
"We should concentrate on what can be done in 2013-14, as 2012-13 has already started. I think it is quite possible to get to nine percent in 2013-14. CII will work assiduously at that possibility," Godrej added.
He disagreed that nine percent growth is a pipe dream, saying that India is capable of achieving it.
The GDP growth moderated to 6.5 percent in the last financial year. In the last quarter (Jan-March), the GDP growth was only 5.3 percent - the lowest in nine years.
Godrej, however, did not agree that the situation was comparable to 1991. He pointed out that the country was almost bankrupt in 1991, and that the reform process had helped.
He compared the present situation with 2008, when there was global financial crisis. "We had fiscal stimulus, we had monetary stimulus. The government managed it very well. We are one of the economies that recovered faster. We again need to pull together to create a similar situation," he stated.
The CII called for correcting the widening current account deficit, which, according to it, is one of the reasons for the rupee depreciation. It underlined the need to increase exports and sensibly contain imports. "Arresting rupee slide will be an important factor in improving the perception of the country," Godrej remarked.
The industry body advocated a cut in the subsidies and promotion of disinvestment for fiscal consolidation.
It urged the government to remove the bottlenecks in the investment in infrastructure, as it important for both current and future growth.
When asked about the lack of political consensus on many of the measures the CII is suggesting, he said that the industry organisation was optimistically trying to change the situation.