 "Jyotsna Suri")
Jyotsna Suri, new president of the Federation of Indian Chambers of Commerce and Industry (Ficci), says all political parties should evolve a consensus on key reform-related legislation. The Bharat Hotels chairperson tells Deepak Patel & Arijit Paladhi that private sector investment isn’t forthcoming due to the high cost of capital and the cumbersome process of doing business. Edited excerpts:
Important legislation such as the insurance and land acquisition Bills could not be tabled in the winter session of Parliament.
I expect all political parties to rise above their political agenda and work for the nation. We are at a point when if we don’t do it now, we will never make it. So, all political parties need to support those Bills. Among other things, they should reach a consensus on the GST (goods and services tax), which should not have high rates.
What kind of GST rates are you looking at? The sub-panel of the empowered committee of state finance ministers had suggested state GST of 13.99 per cent and central GST of 12.79 per cent, a total of 27 per cent.
They have to be prudent; 27 per cent is too high. We are already paying this much — about 30 per cent. We have been
looking at 14-16 per cent overall. To avail of some benefit from the GST, it has to be a prudent figure.
Why has private investment declined, as seen in the finance ministry’s Mid-Year Economic Analysis? Is the strategy of public investment driving growth right?
I think it is a combination of both, private and public, that is required to drive growth. The reasons why private investment is not forthcoming are the high cost of capital and the not-that-great ease of doing business. The private sector can come in if these two issues are addressed. When we talk about the public sector, we talk about major infrastructure projects — Make in India, smart cities, etc. All these projects will definitely generate jobs and there will be roll-over in the economy.
Will a rate cut of, say, 50 basis points by the Reserve Bank of India (RBI) make a big difference?
The finance minister and the RBI governor are aware of the issues. This has to be a decision by the government, in terms of how much they can do. But a cut of 50 basis points will not really make a difference. We understand they cannot slash it. But even if it is a slow start, a cut of at least hundred basis points is required to boost demand.
In terms of ease of doing business, what is your assessment of the National Democratic Alliance government’s current term?
It has only been a little more than six months. The effort is definitely towards making it easier to do business. The government has already stated its aim to improve India’s ranking from 142 to 50, in terms of the World Bank’s list on ease of doing business. The government is taking many steps. All these will come into play over a period of time.
Economic growth declined from 5.7 per cent in the first quarter to 5.3 percent in the second. Recent data show manufacturing production fell to a five-year-low of 7.6 per cent. What has gone wrong?
I think the government has already found remedies by launching projects such as ‘Make in India’. It is conscious that it needs to give impetus to manufacturing. The reason why the prime minister is talking to people abroad, etc, is to bring about interest in India. And, the government is clear that for such investment from foreign countries, ease of doing business is important. For domestic business, a conducive environment is a necessity. We have to consider the cost of capital. How can you set up a manufacturing facility if you have to borrow money at 15-16 per cent?
Recently, RBI Governnor Raghuram Rajan had pushed for widening the Make in India campaign to include areas other than manufacturing. Considering you are from the services sector, what will you focus on as Ficci president?
My focus will not be on one sector alone. I have to work with the government for all industries. As far as the services sector is concerned, all government initiatives will have ramifications on the sector. For instance, ‘Swachh Bharat’ will affect the flow of tourists. Similarly, is elements of security come into play, it will help tourists. These initiatives have to work hand-in-glove.
The tourism and hospitality sector has not shown growth of four per cent in the past six quarters. What has hit it?
We have not even touched the tip of the iceberg in this sector. There is huge potential in this sector. The prime minister has understood the effect of this sector goes very deep. It generates well being and employment. I think this sector will take GDP growth forward by a huge margin. It is not in a good condition because the cost of operations is very high. Room revenues aren’t very good and one is servicing debt at a very high rate. So, there is a deadlock in further development.
