Venu Srinivasan, the new president of Confederation of Indian Industry (CII), says though the economy has started stabilising, India sill faces many challenges like building world-class infrastructure. Srinivasan, who is also the managing director of Chennai-based two-wheeler maker TVS Motor, tells Sapna Dogra Singh that immediate monetising of the fiscal deficit is needed to help private investment and boost economy.
What are your priorities for 2009-10?
Getting back the economy on its feet is the main priority as the economy drives everything, be it removing of poverty or creating employment. The world economy has stabilised and India would soon start showing positive growth, though it might be slower than what we have seen before.
Second is the issue of protectionism. We have already brought up the issue with the prime minister, highlighting how western governments are becoming protectionist, especially in case of services. Other main priorities are building infrastructure and corporate governance.
You are talking about protectionism in other countries, even as you say India should bring in safeguard measures
These are two different issues. Anti-dumping and safeguard duties must be brought in to avoid injury to the domestic market from low-priced imports from China. We want the trade to be WTO compliant and Indian exports are WTO compliant.
How can the challenges in infrastructure be overcome?
India faces a huge infrastructure deficit and requires a massive investment. As commodity prices are very low, this is the best time to invest in infrastructure, which would also give a fillip to the economy.
This would require government increasing public spending substantially and at the same time creating an investment friendly environment to encourage greater private sector participation in creation of infrastructure. Improvement of delivery mechanism is also a very important aspect. There are a whole host of issues ranging from the tendering process to land acquisition and approvals to dispute resolutions, which cause delays in implementation.
Are you looking at more fiscal reforms too?
We hope the RBI would further lower the repo and reverse repo rates by 50 basis points to 4.5 per cent and 3 per cent, respectively. However, this would only be effective if bond yields start reflecting the actual health of the economy. Currently, bond yields have increased because of the high level of borrowing announced by the government.
The yield on 10-year bonds is still very high at over 6 per cent and therefore, there is need to monetise the deficit and make changes in the Fiscal Responsibility and Budget Management (FRBM) Act. CII feels that monetising the deficit is the best option in the current circumstances.
What is CII’s plan on corporate governance?
CII wants to sensitise the member companies along with other corporates. We have enough laws but compliance is the main issue. People should understand the fact that those companies which have good corporate governance in place have large market capitalisation. It is a very important area for CII.
