There is no doubt that next year will be better: RC Bhargava

S Ronendra Singh New Delhi | Updated on December 28, 2020

RC BHARGAVA, Chairman, Maruti Suzuki India   -  Bloomberg

The next year will undoubtedly see improvement, said RC Bhargava, Chairman, Maruti Suzuki India. However, nobody knows by how much this will happen, he said in an interview with BusinessLine. At the macro level, he said the government needs to work on consumer-friendly policies for the auto industry and there should have been a uniform GST rate too. Edited excerpts:

How would you define 2020 for the auto industry?

This was probably the worst year the countries have had, at least in my lifetime. And, it was not something foreseen — it created a totally unforeseen kind of situation, because what it revealed was that our people are affected by the fact that our industrial development and infrastructure for all these 60-70 years have not been built up adequately. There are too many severe pockets of unemployment... this migrant labour phenomena is essentially related to unemployment in some parts of the country. This is because we have not built the kind of economic development and system which should provide adequate jobs for those people somewhere in their neighbourhoods.

The year has also shown that our people are very flexible and resilient, and adapt to difficulties exceedingly well. But, the fact is that going forward, we have to remedy these shortcomings. And this year has shown us how much more can be done more efficiently at lower cost by using technology and digitalisation.

So, I think the future requires us to work differently; we know that we are inter-dependent on each other. And, we do need to see that what we do takes care of the rest of the people. I cannot say that I’m okay, therefore, I don’t care if everybody else is. I think these are some of the learnings of this year.

What are the expectations for next year?

Next year, of course, will be better and there’s no doubt about that. How much better I don’t know, but it’ll certainly be better. The economy is reviving. The vaccine is coming and therefore Covid-19 will be under control next year. And, I think the government has also understood the need for industrial development. The auto industry is reviving. It will grow, but I don’t know how demand will remain next year.

Of course, the auto industry — as things are today — will never get to the consistent/sustained/double-digit growth that we need in this country. I think that is a separate issue which has nothing much to do with Covid-19 or this year. It’s a more a long-term problem, because we still haven’t got over many of our socialist era thinking and behaviour patterns in terms of policies.

So what kind of immediate policy changes would you like to see in the auto industry?

Fundamentally, not only for the auto sector but for the entire manufacturing and industrial sector, the policies must be directed towards letting these industries work at a level playing field...I’m saying I don’t want subsidies, and I don’t want that industry should be asked to subsidise others either. We should try and minimise cost of production, and then let everybody benefit from that. But it doesn’t mean that the poor should be subsidised by the people who are running an industry. That you can do exactly the way the government is doing — direct transfer of benefits by money.

But, don’t make the industry and others pay for this by changing the differential pricing of the same product for different consumers. And, that applies to both auto and other industries. I’m not saying the auto industry should be treated more favourably than others. All industries are equally important.

The same thing applies in taxation. The government must see that production is encouraged by demand. If you tax some products more than others, you are actually retarding the demand for those products. In most parts of the world, there’s a flat tax on all products. The GST is common, but they don’t have the kind of differential GST rates that we have in India.

Published on December 28, 2020

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