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Initial euphoria wanes, India Inc worried about Modi government's 'lack of boldness'
NEW DELHI: Six months after Modi Sarkar assumed power amidst great expectations, many industrialists are concerned about what they see as a lack of boldness in reforms and an absence of radical ideas. As a result, they are largely unwilling to commit fresh investments in the country at a time the infrastructure sector is in a virtual logjam because of high debt.
At a closed door, barred-to-media session of the Confederation of Indian Industry last Saturday, December 6, some of India Inc's most prominent voices asked whether the government is doing enough to jumpstart growth, unlock infrastructure and spur fresh investments. While business leaders conceded the mood was upbeat, they said a lot more needed to be done for fresh investments to kick in.
"This government has moved us from despair to hope... but now I think that hope is waning," said GVK Power & Infrastructure Vice-Chairman Sanjay Reddy, according to people present at the meeting. "The government actually needs to take a bold line and has to say we are going to move away from the past. But we are not seeing that happening at the moment," added SRF Chairman Arun Bharat Ram, referring to labour reforms and the role of the public sector. "One of the biggest opponents to labour reforms is BJP's own trade union and if what we are going to see is every move being weighed politically, we are in the same boat as before," he added.
Arun Bharat Ram's office told ET he wasn't present at the CII meeting, but two attendees confirmed to ET that he was indeed there and had voiced his opinion. GVK also denied that Reddy had made any such comments at the meeting. Biocon founder and Chairperson Kiran Mazumdar-Shaw expressed concern over the BJP government following in the footsteps of its predecessor by floating new welfare schemes in healthcare.
"I am personally very concerned about the government's focus on a universal healthcare programme. As we all know, it should be a sustainable model, it cannot be an overarching free-for-all scheme... there should be some co-pay. Social welfare schemes shouldn't be about doling out freebies and creating an entitlement culture that is detrimental to growth. The government is very pro-growth, but within that, we need to be very sensitive and conscious of the social welfare area," said Shaw, who attended the meeting. She told ET later that "a lot of industry members (at the meeting) talked about how much reforms this government can actually bring in". Shaw also confirmed her comments at the meeting. "What we are seeing right now is reforms that are minor tinkering. There is a lot of interest in Indian stocks, but where is the investment in new projects? Everyone is playing wait and watch," she added.
Columbia University Professor Arvind Panagariya, who is an advisor to Rajasthan's BJP government, is learnt to have said that things which should have happened by now, such as new norms for land acquisition, removing tax uncertainty and recapitalisation of banks, haven't taken place. "India is a little behind on the growth curve... and I am slightly disappointed," he said. Panagariya did not respond to ET's email.
Veteran industrialist Dhruv Sawhney, chairman of the Triveni Group, said the capital goods sector, in the first six months, is still at 60 per cent of where it was in 2011. "This feedback should be given. This sector hasn't taken off even till end of November. It's quite widespread. That shows the actual investment on the ground is not happening," Sawhney is learnt to have said. Sawhney's office said he was out of the country and was unavailable for comment.
Janmejaya Sinha, chairman of The Boston Consulting Group's Asia Pacific unit, expressed concern over the state of the PSU banking sector and suggested the government could consider lowering its stake to 33 per cent. "Credit is not picking up, we cannot get out of this bind," he is learnt to have said. People familiar with the situation told ET that CII President Ajay Shriram started the discussion by inviting participants to air their views in an open and frank manner. Shriram said Finance Minister Arun Jaitley was keen to assess "the pulse and the buzz" in industry circles.
Bharti Group Chairman Sunil Mittal praised the efforts of the new government to turn around the economy and urged fellow CEOs to be patient. "Industry should be patient as reforms would take a few years," Mittal is learnt to have said, adding that the new government was a "welcome change in terms of its approach to industry... and that it has the gumption to say we will go for growth and amend laws".
ET spoke to several other people familiar with the discussions at CII's National Council meeting on Saturday. Many of them described in great detail what transpired in the meeting on the condition that they not be identified. When asked about the meeting, Ajay Shriram, who presided over the discussions, said, "Industry appreciates that changing the system is not possible 'overnight' and is waiting for the next Budget for the government to articulate its vision for the next four years".
GVK's Reddy is also learnt to have said that while the government's "intention is good, industry is yet to see any bold action...global investors are still waiting and watching if the government is really serious". He is also learnt to have listed several financial and structural problems holding back infrastructure. When asked about Reddy's comments at the meeting, a GVK spokesperson told ET: ".... Probably there has been some misunderstanding regarding the same and we would like to reiterate that there is absolutely no truth in it".
Several attendees confirmed that Reddy spoke in detail on problems facing the infrastructure sector. When contacted, Feedback Infra Chairman Vinayak Chatterjee, who attended the meeting, said he had suggested some measures to revive the infrastructure sector. "First, jumpstarting infrastructure through public expenditure as is being done in the highways sector, second, pushing through Rs 18 lakh crore of stalled projects and, third, resetting the public-private partnership or PPP model."
Initial euphoria wanes, India Inc worried about Modi government's 'lack of boldness' - The Times of India
NEW DELHI: Six months after Modi Sarkar assumed power amidst great expectations, many industrialists are concerned about what they see as a lack of boldness in reforms and an absence of radical ideas. As a result, they are largely unwilling to commit fresh investments in the country at a time the infrastructure sector is in a virtual logjam because of high debt.
At a closed door, barred-to-media session of the Confederation of Indian Industry last Saturday, December 6, some of India Inc's most prominent voices asked whether the government is doing enough to jumpstart growth, unlock infrastructure and spur fresh investments. While business leaders conceded the mood was upbeat, they said a lot more needed to be done for fresh investments to kick in.
"This government has moved us from despair to hope... but now I think that hope is waning," said GVK Power & Infrastructure Vice-Chairman Sanjay Reddy, according to people present at the meeting. "The government actually needs to take a bold line and has to say we are going to move away from the past. But we are not seeing that happening at the moment," added SRF Chairman Arun Bharat Ram, referring to labour reforms and the role of the public sector. "One of the biggest opponents to labour reforms is BJP's own trade union and if what we are going to see is every move being weighed politically, we are in the same boat as before," he added.
Arun Bharat Ram's office told ET he wasn't present at the CII meeting, but two attendees confirmed to ET that he was indeed there and had voiced his opinion. GVK also denied that Reddy had made any such comments at the meeting. Biocon founder and Chairperson Kiran Mazumdar-Shaw expressed concern over the BJP government following in the footsteps of its predecessor by floating new welfare schemes in healthcare.
"I am personally very concerned about the government's focus on a universal healthcare programme. As we all know, it should be a sustainable model, it cannot be an overarching free-for-all scheme... there should be some co-pay. Social welfare schemes shouldn't be about doling out freebies and creating an entitlement culture that is detrimental to growth. The government is very pro-growth, but within that, we need to be very sensitive and conscious of the social welfare area," said Shaw, who attended the meeting. She told ET later that "a lot of industry members (at the meeting) talked about how much reforms this government can actually bring in". Shaw also confirmed her comments at the meeting. "What we are seeing right now is reforms that are minor tinkering. There is a lot of interest in Indian stocks, but where is the investment in new projects? Everyone is playing wait and watch," she added.
Columbia University Professor Arvind Panagariya, who is an advisor to Rajasthan's BJP government, is learnt to have said that things which should have happened by now, such as new norms for land acquisition, removing tax uncertainty and recapitalisation of banks, haven't taken place. "India is a little behind on the growth curve... and I am slightly disappointed," he said. Panagariya did not respond to ET's email.
Veteran industrialist Dhruv Sawhney, chairman of the Triveni Group, said the capital goods sector, in the first six months, is still at 60 per cent of where it was in 2011. "This feedback should be given. This sector hasn't taken off even till end of November. It's quite widespread. That shows the actual investment on the ground is not happening," Sawhney is learnt to have said. Sawhney's office said he was out of the country and was unavailable for comment.
Janmejaya Sinha, chairman of The Boston Consulting Group's Asia Pacific unit, expressed concern over the state of the PSU banking sector and suggested the government could consider lowering its stake to 33 per cent. "Credit is not picking up, we cannot get out of this bind," he is learnt to have said. People familiar with the situation told ET that CII President Ajay Shriram started the discussion by inviting participants to air their views in an open and frank manner. Shriram said Finance Minister Arun Jaitley was keen to assess "the pulse and the buzz" in industry circles.
Bharti Group Chairman Sunil Mittal praised the efforts of the new government to turn around the economy and urged fellow CEOs to be patient. "Industry should be patient as reforms would take a few years," Mittal is learnt to have said, adding that the new government was a "welcome change in terms of its approach to industry... and that it has the gumption to say we will go for growth and amend laws".
ET spoke to several other people familiar with the discussions at CII's National Council meeting on Saturday. Many of them described in great detail what transpired in the meeting on the condition that they not be identified. When asked about the meeting, Ajay Shriram, who presided over the discussions, said, "Industry appreciates that changing the system is not possible 'overnight' and is waiting for the next Budget for the government to articulate its vision for the next four years".
GVK's Reddy is also learnt to have said that while the government's "intention is good, industry is yet to see any bold action...global investors are still waiting and watching if the government is really serious". He is also learnt to have listed several financial and structural problems holding back infrastructure. When asked about Reddy's comments at the meeting, a GVK spokesperson told ET: ".... Probably there has been some misunderstanding regarding the same and we would like to reiterate that there is absolutely no truth in it".
Several attendees confirmed that Reddy spoke in detail on problems facing the infrastructure sector. When contacted, Feedback Infra Chairman Vinayak Chatterjee, who attended the meeting, said he had suggested some measures to revive the infrastructure sector. "First, jumpstarting infrastructure through public expenditure as is being done in the highways sector, second, pushing through Rs 18 lakh crore of stalled projects and, third, resetting the public-private partnership or PPP model."
Initial euphoria wanes, India Inc worried about Modi government's 'lack of boldness' - The Times of India
