Days after the government cut corporate tax rate for domestic firms and new manufacturing units, NITI Aayog CEO Amitabh Kant on Thursday said the government has done its bit and now, it is for the private sector to respond by reducing product prices and making investments.
He also signalled that more reforms may be announced to further boost economic growth in the country.
“....the government has done its bit. It has brought in one-tax regime across the country...India’s corporate tax regime is the best in the world. Now, the private sector must do its bit. The private sector is sitting on vast inventories,” Mr. Kant said while speaking during a session at the Indian Economic Summit.
He added, “We have, by one stroke of pen, improved the bottom line of these companies. This year itself, many companies, their balance sheets will jump very hugely and significantly. And therefore, the onus on them is to cut prices, reduce inventories, become competitive, sell off all the stocks and create new capacities in this country. The government has done its part, the private sector must respond.”
Shobana Kamineni, executive vice-chairperson, Apollo Hospitals, in her address, pointed out that one of the reasons that the private sector is holding back investments is uncertainty in government policy.
Replying to a question on what was holding the private sector back, Ms. Kamineni said, “...I think it is also because of the scare that the governments can midway, after you’ve made all these investments, suddenly pull the rug under you... that is keeping a lot of people away. I see it even in us making investments, suddenly, if there are price caps...”
She, however, added, “I still believe that we’re entrepreneurs, we’re in it for risk, we don’t expect a red carpet, we expect some potholes...we’re taking risks so that we can make profit at the end of it... but there has to be some amount of certainty...when the government stands behind anything...”
Mr. Kant said steps such as reduction in corporate tax are bringing in “predictability and consistency.” Talking about the economy, Mr. Kant pointed out that both the RBI and the government have taken a series of measures to take India back to a high trajectory of growth rate and more measures could soon be announced.
“I think many more structural reforms are in the offing. The government has pushed for public sector disinvestment. I can tell you, we have pushed for asset monetisation in a very big way...Our belief is that instead of greenfield projects, investors must come into brownfield projects and government must keep itself out of business. Government must be a facilitator and catalyst,” he said.
