What India Inc expects from the new govt

Macro numbers continue to reflect distress; the pace of recovery is slow. India needs an urgent return to high growth. Such advocacy must not be viewed as mere promotion of business interests, but a call for job creation, without which we risk a fragmented and dysfunctional social order.

The freshly elected government will face unique challenges and opportunities. We need both short-term hits and long-term fixes. We need to work to enable enterprise across all sectors of the economy and focus on employment creation in ample measure. It has to be a truly enabling environment; only that will make growth possible. The right to employment will be reduced to doles if there are no meaningful, productive jobs.

Success mantra Without a strong manufacturing and services sector, supported by the security blankets of energy, water and food, India cannot aspire to be a global power. Success in key areas must be our mantra. FICCI advocates a comprehensive, responsible agenda, addressing the lowest common denominators rather than national aggregates. For instance — as in the first master ‘Bombay Plan’ for India's development — our principal objective can be a specific multiple increase in per capita income over a period of 5-10 years.

Our first attack should be on inflation which chips away at net incomes. Persistent food inflation is a key factor which needs to be dealt with through a large increase in agricultural production and productivity, perhaps unleashing a process like the green revolution supported by a prudent use of higher yield seeds and other inputs.

Infrastructure for storage and distribution is a pressing need to reduce post-production wastage. Resolving procurement practices and administered price mechanisms are clear short-term hits. In the long term, addressing the product mix in sync with changed diets will relieve price imbalances.

India must attract all forms of legitimate capital from domestic and global sources. Being friendly to capital is distinct from just inviting capital; India has been aggressive on the latter front, but not in enabling the former. Capital friendliness does not compromise on national priorities; it implies stable and equitable policies and practices that allow an acceptable risk-return balance.

Our financial sector smoothens fund flow to “real sectors”. We must improve the health of, and expand the banking sector.

There is an urgent need to put into productive use assets financially impaired due to either slowdown or administrative actions and failures. Power and mining assets are examples of this; a six-month action plan must be charted.

Road blocks A major employment inhibitor has been our senseless labour laws which encourage capital intensity over a prudent capital-labour balance. Since dismantling archaic laws will take time and effort, contemporary legislation encouraging incremental stable job creation, and grand-fathering older provisions for existing workers could be a quick hit.

Ensuring timely and transparent decisions is critical. Just as a corporate board is required to be in firm control of key decisions, the Union Cabinet must be the single accountable point for decision making and monitoring implementation. Further, the group of ministers culture must be abolished to demonstrate such bold intent. A systemic propensity to re-visit decisions based on allegations but without conducting rigorous due diligence, is detrimental; it vitiates the decision-making process and deters serious investors.

The much spoken of “ease of doing business” must be addressed well beyond improving rankings on select indicators. Aggressive dismantling of business regulations is needed, keeping in view both relevance and multiplicity. Various regulators must be mandated to regulate their sectors with a “development” mindset and not “control”; regulatory effectiveness must be measured by the growth and health of the sector.

We need to work on key factors with missionary zeal over 6-12 months. The Goods and Services Tax is needed in an appropriate, equitable form for all states. To address potential difficulties in land acquisition in light of recent legislations, government can perhaps demonstrate the best way to acquire contiguous land for (say) extended railway, road or PSU projects without invoking special rights and on terms as applicable to industry.

Contain deficits We need mission-mode-plans for containing both fiscal and current account deficits. We must identify sectors of forex accrual for development, and devise “emergency plans” to boost coal and fuel output and mitigate imports over 24 months. Credibility issues in government finances must be addressed by evaluating the “real” picture, including off-balance-sheet items, and articulate a mission to become revenue-neutral or surplus over 3-5 years.

Widening the tax base and capping aggregate subsidies to ensure merit-based coverage can both be addressed. While no one makes a case against the economically weak being supported via subsidies, it is also true that our social plans misdirect subsidies. A plan to address this over two years has become imperative.

There appears to be an anti-business atmosphere in the country, a phenomenon seen in other countries too, from time to time. We could be forgiven for beginning to think that India has a population divided into extortionists and victims. While there are aberrations in all walks of life, the cure lies in dispensation of justice and not tarring everybody with one brush.

Industry, commerce and media must correct wrong impressions and negativity. Our society can move ahead only on the basis of positive sentiments and in taking pride in generating national economic wealth.

(The writer is the president of FICCI)

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