‘Goods and Services Tax is a ready-made stimulus'

Leadership is not new to Adi Burjorji Godrej. The third generation Godrej to head the $3 billion-plus Godrej Group, he quickly transformed the locks, almirahs and consumer products company into a diversified conglomerate which sells everything from animal feed to soaps to steel products and chemicals. Over the years, he has restructured the 115-year-old group into focused business areas. Largely family held, the Group took its first step into the markets with the listing of its consumer products arm.

Mr Adi Godrej has taken over as the President of industry body Confederation of Indian Industry (CII) at a particularly challenging time not just for industry, but the economy. In his first interview after taking over the reins at CII, Mr Godrej spoke on a wide range of issues, including what the government could do to revive growth, and what industry can do to sustain the momentum. Excerpts:

What are the key steps which need to be taken to revive growth?

First, we need to correct the perception about India. The perception is worse than reality. Some recent actions, like retrospective amendments of tax laws, and GAAR (General Anti Avoidance Rules) have created a negative sentiment in the minds of investors. That needs to be corrected. The government also needs to act. Reviving growth will depend on restarting the reforms process, and through delivery of effective governance.

Interest rates are still high and need to be cut further. The RBI's recent rate cut was welcome and this needs to be passed on. There is scope for a further reduction in interest rates.

What role can industry play?

We intend to play our part in reviving growth. We will work hard with the government to change the negative sentiment. Sentiment is improving, but more can be done. Besides, we will also use our access to work on all stake holders to ensure that second generation reforms get carried through. We have access to government, Opposition, overseas investors…We will use this to get consensus on major issues.

I have also maintained that all of us (industry) can do our own bit to boost growth, by focussing on our businesses and taking steps to ensure that we maintain the growth momentum.

What kind of steps?

There are lots of measures which can lead to internal improvement and make industry more competitive. Investment in innovation, R&D, total quality management, continuous improvement…

But growth is still down. In fact the slowdown in industrial output has been a key contributing factor. Do you think the economy needs another stimulus package like 2008?

We got a lot of praise for handling the 2008 crisis well. By responding quickly. You must remember that the key stimulus which was provided then was a cut in excise duty.

But the Budget has just hiked excise duty..

There doesn't have to be a special package. The GST (Goods and Services Tax Act) is a readymade stimulus package. It just needs to be implemented. That alone will add 1-2 per cent to GDP. Then there is the new DTC (Direct Tax Code), the new manufacturing policy…everything is ready. It just requires implementation. This will create a virtuous cycle, boost production and consumption.

But there is talk of policy paralysis…

There is some delay in decision making. But the government is willing to act. We met the PM, he is committed. The Finance Ministry is also willing.

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