This year’s Budget will be keenly watched as it comes amid global turmoil.

Bloomberg TV India asked TVS Motors Chairman Venu Srinivasan what the government ought to do to ensure the revival of the economy.

What’s your assessment of the economy right now and the kind of headwinds that Finance Minister Arun Jaitley faces ahead of the Budget?

I think with the last two budgets, we have now embarked on a phase of consolidation of fiscal deficits and current account deficits, which five years before was kind of untrammelled. We were getting into a situation where we were really concerned about the macroeconomic situation. Now that they have really brought down the fiscal deficit and also current account deficit, thanks to the low commodity prices, we are in a much better situation today.

What is the heavy lifting that the government has to do to ensure economic revival?

I think the first thing we must understand is the global situation. In the global context, every economy is doing badly because commodity consumption has been at the lowest in 20 years.

We have never seen oil prices like this, coal and iron ore prices are down and agriculture commodity prices are at the lowest ever. So given these factors, India is doing better than any other economy in the world. Therefore, it is a relative situation and not the absolute situation. We are still growing at 7.2-7.4 per cent.

And things are improving steadily. Road construction is going very fast and we have reached the highest road construction phase ever. The mines are actually buying heavy equipment and hopefully they will come on stream in two years.

There are many early green shoots that we can see all over the economy. The only problem has been the poor monsoon for two years in a row, which has suppressed rural demand and also caused a lot of pain in the rural sector.

Farmers are really in a great deal of pain. So, what do we do going forward?

I think the first thing is to get the banks recapitalised. The bad loans have accumulated because of delays in completion of infrastructure projects, which have been held up for various clearances. And then the re-auctioning (of scarce resources) has to take place. But now we have got a very transparent system of auctioning of airwaves, coal mines and public infrastructure. I really believe that we are all set for a very good growth in 2016-17.

You have seen dumping of steel from China and that has prompted the government to impose a minimum import price. But it has started to hurt some industries like the auto industry, which is a consumer. How do you see the Centre balancing this out between industries?

When rampant dumping of steel and other commodities is going on, the government has to take a balanced view to protect the investments that have been made in the country.

We have made significant investments in the steel sector and we cannot allow that to be compromised by indiscriminate dumping.

While it does certainly affect the downstream sectors, we have to take a national view and not really be parochial in saying — I am the consumer, I am suffering, and why are they being protected. I think government is doing the right thing and should to continue taking such steps further when required.

How concerned are you over the health of the financial sector? How do you thing the government should address it?

That is the biggest concern. Banks have almost ₹6 lakh crore worth of distressed loans and we need to recapitalise the banks to the extent of ₹4 lakh crore and bring them at least to Basel-II norms. I personally believe the government should exceed the fiscal deficit target only for that reason.

With RBI help, further loans given out by banks should have a greater measure of scrutiny.

What’s your wishlist for the Budget?

The government must maintain the momentum of consolidation. We must have stability in policies. No retrospective tax. No sudden surprises. If we gradually move to the long term, where the Budget becomes a non-event, that will be the greatest achievement of this Budget.

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