India is at the cusp of a possible economic recovery. With a landmark political mandate, the Bharatiya Janata Party (BJP) is well-placed to facilitate this transformation. Its goal: Double-digit growth, say industry bigwigs. But can India withstand external pressures such as rising fuel prices, led by the strife in Iraq, and a weak monsoon?
The inaugural Forbes India CEO Dialogues: The Leadership Agenda invited some of India’s top business leaders to a closed-door conversation to chart out the ‘Road to 9 Percent’.
Ajit Gulabchand, chairman of Hindustan Construction Company (HCC), Harsh Mariwala, chairman of Marico, Dilip Piramal, chairman of VIP Industries, Sunil Kaushal, regional chief executive, India & South Asia of Standard Chartered, and Ashish Chauhan, MD & CEO of Bombay Stock Exchange identified the long-term reforms which the Narendra Modi-led BJP government must undertake to help kickstart economic growth.
The discussion was moderated by Senthil Chengalvarayan, editor-in-chief, Network18 Business Newsroom. Excerpts:
Senthil Chengalvarayan: The road to 9 percent is a key issue. What is the mood like, how different is it from two months ago? Are investors confident to put their money where their mouths are?
Harsh Mariwala: The mood is very bullish; people expect a lot of changes because the mandate is clear. The concerns have all gone: The conflict at the top between the former prime minister and the rest of the party; weak UPA numbers, a weak prime minister who was not willing to act, which led to power plays with different ministers, [the lack of] inter-department co-ordination, which created a vacuum in the former government—all this is gone.
We now have a person who everyone relates to. Within the party, it is clear that he [Modi] is calling the shots. After a long time, India has a strong leader who is not dependent on alliance partners. All the underlying factors which were responsible for creating the overall paralysis have been resolved. This is making people bullish.
But we also have some things to worry about. Has he promised too much? Are the expectations too high? People will wait for one or two years. If there are strong expectations and a big setback, it could lead to some degree of upheaval in society, which can impact everyone.
Inflation is a worrisome issue. Fundamentally in the economy, there are supply problems, mostly on agricultural items, barring foodgrains. Because of factors like the lack of roads, lack of refrigeration processes and a limited shelf life [of grains], money is not being pumped into these agricultural processes. Modi has to be cautious and [has to] manage growth in such a way that it does not lead to high inflation or high environmental degradation.
Ajit Gulabchand: I agree. There were many obstacles for governance in the previous set-up. But there are some issues that confront this government too. There are legacy issues in which the whole economy has substantially collapsed. Repairing it is an essential task which will become the foundation of things to happen.
Prior to the elections, there was a sense of hopelessness that this will happen. It has now entered the realm of possibility. We have a serious infrastructure issue where the government is yet to pay Rs 1,50,000 crore to the sector. There is a logjam at the banks. There is dedicated work to be done to resolve these things. There are also several projects held up by the environmental ministry. An arduous task is to create objective and measurable standards which are easy for everyone to see and follow—and this will require some time.
A grandfather legislation is required to free the Rs 50 lakh crore worth of projects that are being held up. The direct taxes draft is draconian and needs to be addressed. The thing to be learnt from the Companies Bill is that the government should not scrap an existing bill. It should take the old one and amend it. The goods and services tax (GST) is good but it means that India has to become a common market, which all states must agree to and see a benefit from.
Piramal: We need to encourage states to compete and do better than each other. I want to give a perspective on the taxation structure. For the first time, service tax will be the highest component of indirect taxes, at around Rs 15,000 crore.
The government must address the excess food grains issue, to reduce inflation. It must look at privatisation of coal mines which will resolve some of our power issues. Labour reforms are also critical.
(This story appears in the 25 July, 2014 issue of Forbes India. To visit our Archives, click here.)
To make a big difference in economy and in GDP its essential to be selfdependent in larger extent. As our country is still on agricultur based involving maximum workforce in farming the mordenization of this sector is required by proper planning and segmentation of land as per weather condition of soil and scope of selling in greater extent.
on Jul 15, 2014I am on it (opinion of the discussion panel). I too believe there is a lot of amendments and legislature redesigning
on Jul 14, 2014