 "Naushad Forbes")
Naushad Forbes, the new president of the Confederation of Indian Industry (CII), on Wednesday pegged India’s economic growth at eight per cent for 2016-17. This is higher than even the government’s expectations of 7-7.75 per cent as well as the Reserve Bank of India (RBI)’s projections of 7.6 per cent.
Forbes attributed the difference between CII projections and that of others to ‘imprecise’ GDP calculation methodology.
On the loan defaults by beleaguered businessman Vijay Mallya, he said wilful defaulters “need to be brought to the book” and unpaid loans must be recovered.
Holding a press conference a day after taking charge of his new assignment, Forbes recommended that the government shift its trade policy focus from defending Indian market to facilitating access for Indian industry in international markets. According to him, if the recently announced safeguard duties and minimum import prices imposed on steel stay for the long run, these will harm the economy.
To be precise, the CII has given a range of 7.75-8.25 per cent for the country’s economic growth. Its lower range is the upper range given by the Economic Survey — 7-7.75 per cent.
Justifying the CII’s robust growth projection for the economy, Forbes said India’s strong macroeconomic fundamentals, favourable business sentiments, and downward trend in interest rates were significant positives for the economy.
RBI had on Tuesday forecast a 7.6 per cent growth for the current financial year on the back of favourable monsoon, among other factors.
On what should be the government’s approach towards wilful defaulters such as Mallya, Forbes said: “Wilful defaulters need to be brought to book using the laws of the land and we need to use our legal process as a way of recovering what can be recovered.”
Mallya-promoted Kingfisher Airlines owes nearly Rs 7,800 crore to a consortium of 17 lenders led by State Bank of India, which had an exposure of around Rs 1,600 crore to the now-defunct airline.
“Going bust is not a crime. But, there are aspects to going bust that might be a crime and that’s what the legal process is supposed to answer.”
The industry body’s comment comes in the wake of the government’s stern warning to wilful defaulters to settle their dues honourably with banks or be ready to face “coercive action” by lenders as well as investigative agencies.
The new CII president also suggested that a National Asset Management Company be formed to deal with the issue of rising non-performing assets (NPAs).
On his take on the government’s protectionist move to impose safeguard duties and minimum import prices on steel, he said if it WAS done to stem imports in the short run due to over-supply, it was a right move. However, if these measures stay for the long run, those would harm the economy as the raw material costs would rise for the user industry, he added.
On the country's ease of doing business scenario, he said: “More needs to happen... The Prime Minister has said we need to be in the top 50 worldwide, so we have a lot to do to get to the top 50 countries in terms of ease of doing business.”
India's ranking on ease of doing business improved 12 notches to 130 this year out of 189 countries in the World Bank report.
The CII president highlighted the need to focus on regulatory mechanisms and the various regulators who sometimes “operate in a manner that is somehow counterproductive with the ease of doing business intentions”.
He added that much more should done to simplify tax administration and enable greater transparency on how it gets implemented on the ground.
On risk factors, Forbes said the external demand situation would need to be closely watched. A flat corporate performance, fiscal pressure from the Seventh
Pay Commission, and a potential increase in oil prices in the coming year would be risk factors, he noted.
Employment generation and entrepreneurship are imperatives to address inclusiveness of the growth process, Forbes said. He observed that initiatives such as Standup India, which the Prime Minister launched on Tuesday, would create new opportunities for inclusive growth. He also outlined CII’s initiatives in this critical area.
