 "Sunil Kanoria")
Apart from heading infrastructure financing major SREI, Sunil Kanoria recently took over as president of industry body Assocham. He tells Subhayan Chakraborty why parliamentarians should immediately set aside differences to bolster reforms and how treating Indian entrepreneurs better would boost domestic investment growth. Edited excerpts:
The goods and services tax (GST) Bill was not passed in the winter session of Parliament. What, according to you, is holding it back?
Parliamentarians don't want India to develop. They are only bothered about shouting. It's unacceptable for senior politicians to behave in such irresponsible manner in a democracy. Issues which have visible social pressure like the Juvenile Justice Bill have prodded MPs to work; otherwise they are not bothered.
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Why didn't industry try to convince the Opposition parties to pass the Bill?
We have been trying to reach out to all stakeholders. A joint conference was held by all the major industry associations on GST, yet nothing is going forward. However, I welcome the government on agreeing on removing the one per cent tax on inter-state trade. There should be one tax for the entire country.
How come there's no response even after such comprehensive talks?
The perception is that industry has a purely profit motive in pushing for GST. Also, authorities take action only when they see intense media coverage like during civil movements and we can't do that. The GST issue unites India. The current framework is very detrimental to a small trader, who wants to engage in inter-state trade. Goods are taxed every time a state boundary is crossed, which takes up time and complicates the process.
What is your opinion on the bankruptcy Bill, which was referred to a joint committee?
I welcome the move. It needs to be passed urgently. Assets locked in bad loans need to be released and given to new promoters. A lot has happened on this regard, but the national companies law tribunals, also needs to be formed fast.
India's merchandise exports have gone down for the 12th straight month in November, an astounding 24 per cent annual fall. How to bring about a turnaround?
While global demand has been low, Indian companies need to become competitive. Long-term issues like strengthening of infrastructure and reduction in prohibitively high interest tax rates need to be addressed. That's why we need one direct tax and one indirect tax. Everything else should be subsumed within them. We have also called for subsuming real estate under GST. Also, ease of doing business needs to be further strengthened. Until then, the special support measures declared by the government must stay in place.
Isn't it time real estate companies stopped holding out on unsold inventories, while lakhs of empty units are waiting for customers?
The cost structure makes interest and mortgage rates high for investors who are seeing increasingly smaller returns going forward. Certain portions of the market were earlier investors market. The commercial space is still having large yield over time. But private units are a users' market now. The capacity has built up much higher than demand in the short term. Holding cost is also high, but sales are not there.
Assocham has declared a revised growth rate for the current financial year at upwards of 8.1 per cent, whereas the government itself has recently suggested a lower figure of 7-7.5 per cent.
We have factored in the strong performance of the end part of recent monsoon. Results of crop can be good in January. Agricultural growth will pick up then. We also believe other steps by the government will help.
The infrastructure space is going to play a major role in that growth. The CRISIL-Assocham report says India will need more than Rs 31 lakh crore in the next five years to suitably address its infrastructure needs. Where will this money come from?
It is actually Rs 1,700 crore a day. It will be partly from the government and partly, from the industry. The report states the optimum levels required for a robust growth. It might not happen also. But India needs this. Infra has a multiplier effect in the economy too, more than 20 times. Just like the road sector is approaching new models, ease of doing business might act as a boost for infra. Money is not the constraint. Intent and bottlenecks in execution are the problems. Good environment needed for congenial investments.
But this will also involve a significant amount of domestic investment, which you have in the past said needs a major boost.
Indian entrepreneurs are currently treated as if they have looted the country. Better engagement from the government and resolution of issues in a faster manner is required. And that is happening, but results are not coming in. Parliament doesn't work and bureaucrats don't execute because they are afraid to take steps.
