India has to accelerate reforms and strengthen governance to improve investor sentiment that had turned negative in the wake of serial scams that virtually paralysed decision-making, retrospective tax changes and labour unrest, Adi Godrej, President of the Confederation of Indian Industry (CII) said on Friday.
Addressing a press conference after unveiling the CII theme for 2012-13 ‘Reviving Economic Growth: Reforms and Governance’ and the agenda to get there, Mr. Godrej said there was no denying the negative sentiments in the investor community following scams like 2G and Coalgate, retrospective tax changes in the Budget, the proposed amendments in General Anti Avoidance Rules and the violent labour unrest in Maruti’s Manesar plant. The high interest rate regime also put a damper on sectors such as automobiles and residential housing apart from slowing down investments.
However, the CII president was of the view that some of the statements made by the new Finance Minister P. Chidambaram gave hope of some actions on these fronts that would put the economy back on to the path of 8 per cent plus GDP growth by 2013-14.
Stressing the need for accelerating policy reforms in areas like the Goods and Services Tax and opening up insurance and multi-brand retail to FDI, Mr. Godrej also called for transparency in governance, advocating what he termed “less of case-by-case” decision-making by Government in the sale of national assets.
On its part, the industry should not talk about what is wrong and instead focus on what can done to improve efficiency and productivity, he said.
In reply to a question about the impact on policy by the frequent disruption of Parliament by Opposition parties, he said it was the CII’s wish that the Parliament functioned smoothly. He also urged political parties to sink ideological divides and abandon “political grandstanding” and work together for bringing about sustainable and inclusive development.
B. Santhanam, Deputy chairman, CII-SR, added that while scams were a worldwide phenomenon, the issue for India’s image from the controversies was the paralysis of decision-making that led to a perception that nothing moved. Instead of becoming mired in an issue like the 2G scam for which no solution has been found even after two years, the government needed to get at the bottom of the truth and move on, he said.
Supporting FDI in retail as it would benefit farmers and consumers, Mr. Godrej said the government should at least allow the State that want to attract FDI in multi-brand retail to go ahead. Allowing FDI would bring international expertise in logistics and better supply chain management that would reduce wastage and lower costs, he said.
On the CII’s assessment of the power situation, Mr. Godrej said the outlook on the energy front was pretty bad. Despite building significant power capacity over the years, they have remained idle due to a shortage of fuel. “Coal production needs to be increased; the private sector should be allowed in coal supply. It is a shame we have to import coal.”
The CII president also pitched for lower interest rate regimes and long-term mortgage facilities to make residential housing more affordable.
The CII has initiated State-level talks with trade union leaders to discuss sore points in industrial relations. “We’re working towards instituting this interface as a regular mechanism,” said Chandrajith Banerjee, CII Director General.