New Delhi: Bullish on improving the “ease of doing business” for investors in India, especially with the Chinese economy facing a slowdown, Prime Minister Narendra Modi on Tuesday urged top industry leaders to “take risks” and step up investments, particularly in job-creating sectors.
Addressing a meeting of corporate honchos and industry captains, bankers and economists, which he had called to discuss the global economic scenario and India’s place in it, he focused on how India could benefit from the global sluggishness triggered by the slowdown in China.
Sources said India Inc made a strong pitch for a cut in key rates by the Reserve Bank as they felt the impact of the global scenario won’t be that much in this country.
During the meeting that lasted over two and a half hours, participants discussed the economic scenario and with the help of presentations analysed ways and means of taking advantage of the situation, finance minister Arun Jaitley told reporters later at a press conference. He said the participants, of whom 27 spoke, felt the global situation, especially volatility in the capital and currency markets, was a transient phase and that steps should be taken to strengthen the real economy.
Mr Modi laid emphasis on low-cost manufacturing and felt the strength of the economy lies in its huge human resource, size of the domestic market and the fact that it is not entirely export dependent.
He also laid emphasis on small and medium enterprises, and on using NREGA funds as a possible tool for skill development and using the Mudra Bank for supporting the unorganised sector, Mr Jaitley said. Transparency in governance will lead to early decisions, he added. On industry’s demand for a rate cut, the finance minister said this was the domain of the Reserve Bank, which set monetary policy.
While participants felt a large number of tax matters had been resolved, the remaining reforms, including passage of the GST Bill, must be carried out, the minister said. “They expressed hope that GST, that was held up because of parliamentary obstruction, will move forward,” he said.
“What we are looking at is different steps to strengthen the Indian economy,” Mr Jaitley said. These steps, he explained, will range from investment in infrastructure, irrigation, easing doing business, attracting more global investment, generating private sector investment in India. “These are the various steps which we are taking. So in this situation the best option for India is to strengthen our basic parameters... We are concentrating on strengthening the economy as a whole and how to convert it into an opportunity,” Mr Jaitley added.
Boosting infrastructure spending as well as concentrating on the agriculture sector was the key to strengthening the domestic economy, he said, adding that an improvement in agriculture would enhance the purchasing power of a large number of people.
Increased expenditure on irrigation, emphasis on food processing, expediting investment procedures for infrastructure creation were among other suggestions made at the meeting, he said.
Reliance Industries chairman Mukesh Ambani, Tata Group head Cyrus P. Mistry, Aditya Birla Group head Kumar Mangalam Birla, Sunil Bharti Mittal of Bharti Airtel and ITC chairman Yogi Deveshwar were among the industry leaders who attended the meeting.
RBI governor Raghuram Rajan, ICICI Bank CEO Chanda Kochhar and SBI chairperson Arundhati Bhattacharya and economists like Subir Gokaran and chief economic adviser Arvind Subramanian as well as Niti Aayog vice-chairman Arvind Panagriya were also present.
The participants also emphasised two other legislative steps — one relating to the bankruptcy code and the other on the definition of corruption under the Prevention of Corruption Act, a step which the government has already taken, he said.
In his presentation before the PM, chief economic adviser Arvind Subramanian spoke about the key events that were contributing to global turmoil and what India could do to tap the opportunities and meet emerging challenges.
Speaking at the press conference, he said: “India stands out. Whatever projections you are seeing, (India) is the highest growing country among all major economies and will remain a relatively attractive investment destination.”
The Prime Minister, Mr Subramanian said, “has clarified that this is not a matter of one country taking advantage of another country’s (China) performance which is deteriorating. It’s a matter of seeing challenges as opportunities that arise.”
Falling prices of oil and commodities in the global market is an opportunity for India as it is a net importer, Mr Jaitley said, adding in this backdrop several participants suggested that steps be taken to further strengthen the Indian economy and improve the ease of doing business.
