The slowdown in investment cycle is one of the major concerns for the industry. This has caused tremendous stress across sectors such as infrastructure, real estate and construction. The reason for the slowdown is high interest rates and supply side constraints. The supply was limited because the country was not producing as much to meet the demand. Manufacturing sector needs to revive. Tax burden on the manufacturing companies is huge.

Starting from the cost of raw material to transporting it to the factory, the industry is overburdened. Not to mention the cost of moving the finished goods to the market place. Difficulty in land acquisition has stalled many Greenfield projects across sectors. The Land Acquisition Bill, which was supposed to simplify the process, has complicated it further. This needs to be addressed on priority.

Similarly, getting environment clearance or nod from the pollution control board takes a long time. There is huge confusion on allocation of natural resources. Almost all the government departments related to the mining sector do not want to take a decision on natural resource allocation to corporates in anticipation of the new Mines and Minerals (Development and Regulation) Bill coming into force anytime soon.

Last, but not the least, in the list of worries for the industry is the capital. Capital raising for projects has become a challenge with the equity markets, till recently, not doing well. Tapping the international markets has become difficult because of huge volatility in rupee-dollar valuation. The low GDP growth has caused stress in the existing operations. The availability of cash accruals is significantly lower and raising new capital has become increasingly difficult.

I am not sure whether these issues can be addressed through the Budget or separate legislation. The Government needs to tackle fiscal deficit on priority. It looks rosy now because most of the planned expenditure has been postponed to next fiscal. The money available from the banking system to private sector reduces if the fiscal deficit remains high.

The Government should address the fiscal deficit by broadening the tax base and not by over burdening the existing tax payers. In a country of our size, there are only three crore people who pay tax. Widening the tax base and reducing the tax burden on the industry should be considered.

(As told to Suresh P Iyengar)

Seshagiri Rao is Joint Managing Director, JSW Steel

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