“There is a sense of insecurity among business community and that has to end if we are to see higher investment rate which has slid from 35% to 29% over the last five years,” said well known economist Sanjaya Baru, delivering a talk on ‘Current State of Economic Affairs’ at Federation of AP and Telangana Chambers of Commerce and Industry in Hyderabad on Monday.
“Corporate governance is not made by creating rules. It is about how you deal with businessmen. We have created a regulation raj. Earlier, we had licence-permit raj which Prime Minister P.V. Narasimha Rao dismantled. He also changed political thinking about businessmen. Business leaders are also nation builders. We have to treat them like that,” said Mr. Baru who spoke on broad contours of economy and where it is headed.
He has recently taken over as secretary general of FICCI.
“I don’t think there is any fudging of data by government which showed acceleration of growth till 2016. There are two views - one that the economy is in a mess and another that the slowdown is temporary. There has been a slowdown. We have to accept that,” he said.
“There are 76 lakh businesses that have registered under the GSTN. Four lakh account for 90% of revenue while 72 lakh account for the rest. Implementing GST has been a problem but the government is making the necessary corrections which is a good sign,” said Mr. Baru about the recent tweaks in GST rates. Talking about the dismal private investment in the country, Mr Baru blamed business environment for the problem.
‘Right move’
“Investment is an act of risk taking. There are honest mistakes and dishonest businessmen. We have to differentiate the two. The Insolvency and Bankruptcy Code is a step in the right direction. But we need a mindset change about businesses. It has to begin with the government. It is the responsibility of the State governments to create the right climate. Once it is done, investment cycle will turn upwards,” said Mr. Sanjaya Baru prescribing a clutch of measures including reducing lending rate by 100 basis points to boost purchasing and investments.
