This country could not be in a more unenviable position.
After years of non-governance and scams, we got a PM and a govt. that literally got down to it. And the PM himself has been trying to be the perfect politico-economic global catalyst for India. And yet our ‘top class’ private industry is baulking at even the thought of fresh investment - preferring instead to live with insipid results and piles of unproductive reserves (along with piles of re-rolled-over debt). It is a different matter that the Sensex was running ahead of itself, but has thankfully been restrained. Industry during the UPA II term just wanted a return of sentiment…the rest they would take care of. Now sentiment is not enough, they want to be taken care of specially and specifically (on labour, land, tax, incentives). Has liberalisation come to only mean something that gives us immediate tangible benefit? Meanwhile, thankfully the world outside has started scenting the sentiment. Our much-vaunted private sector banks are behaving no better. The RBI Governor recently had to chide banks, saying that they are quick to hike rates when RBI does so, but have enough excuses to not reduce them when RBI does. The same has forever been true of the private sector with reference to changes in excise duties. The private believe in ‘selective amnesia’ and ‘one way – only upside’ traffic. Talk of fair weather friends. Finallly, even the PM was forced to comment: ‘The private sector of the country is still stuck with legacy issues of governance. The govt.’s job is good governance for everybody. My govt. will make policies. If you fit into it, come on board, otherwise stay where you are. My job is not to spoon-feed anyone’. This is the clearest ‘positive’ statement a PM has ever made to the private sector.
It’s time for domestic industry to help kickstart this economy. Services, especially IT/ITES, are quite dependent on the global market, which is still in a slowdown. Agriculture, and therefore also rural India, has been hit by a poor rabi harvest, and a weak monsoon (likely) will only drive it further down. The writing is on the wall. You can rule out the rural consumption bonus this year – in fact you can rule rural out. And, if domestic industry continues to play ‘dead’, the festive season this year promises to be dull. Industry needs to get consumers and consumption moving again. There is no real dearth of household funds. It’s all there, in gold and real estate and savings. Get people to buy - offer lower prices, discounts or freebies, for a limited 3 month period. Maybe the Real Estate sector needs to move first. Let them take a worthwhile risk. Let them drop prices, between 10 to 20%, and let the State govts. reduce registration charges by at least 2% – agian for just 3 months. The Centre should increase the Rs 50 lakhs limit to Rs 5 crores, for investment in (real estate) tax-saving bonds. The extra funds thus obtained should be put into a special Infrastructure Fund. Please remember that Modi and Jaitley are anyway coming after you on black money. Wake up, dear builders and developers. What fun is it to sit on a pile of debt…waiting…and just defaulting or borrowing more to refinance old debt?
Dear industrialists, if you have lost your mojo, please hand over the reins to someone who still has it. Surely you are not waiting for foreigners to wake you up to Make in India. The reality is that Indian industry has always had ease of doing business (except a few short years)…they have always known or found the ‘easy’ – often short cut - way out. Now, with Modi and Jaitley at the gate, that way/lane is seemingly closed. Domestic industry is perhaps finding itself on a fairly level playing field with foreigners. With this transparency, and with a system that won’t be so easily ‘fixed’, they seem quite unable to cope or ‘perform’. Maybe it is not so surprising, since this has been the story with exports, where we have to compete openly with the best in the world and have failed consistently (despite even a 30% currency devaluation). Industrialists have had to find convenient various excuses for their non-performance and lack of investment. They are therefore pushing the govt. on land, labour, Net Bias, GST, and even ‘ease of doing business’…and buying time in the process (as stated earlier, Indian industry has no real need for ‘ease of doing business’; they now seem to want ‘easy business’). They are even condescendingly saying that the govt. should be given more time, and that at least the intentions are good! The delay in the passing of the land acquisition bill and the govt.’s over-enthusiasm on over-modifying it, is providing industry the best excuse. It’s time to call their bluff. The govt. is unnecessarily getting blackmailed, thinking that industry is the only golden goose that lays jobs. It’s time the govt. woke up. If it concentrates its energy as much on facilitating infrastructure, food processing and e-commerce (and the logistics for both), big investments and jobs will happen, all across the country. For manufacturing, let global companies come and wake up domestic industry to jointly Make in India. The govt. should preferably focus on a few countries for Make in India: maybe Japan, Korea and Germany (US wants too much quid pro quo and expects to get it), and target specific industries and specific States.
Indian Industry, it’s time to act now, or for the foreseeable future hold your comments. Pretty soon we should be able to separate the men from the boys.
The PM has been quite bold in stating his views. Sample this:
If you do things at the end of your tenure or on the eve of elections, it is termed pro-poor; if you do it at the beginning, without waiting for the ‘right time’, it does not get noticed.
Unfortunately in India labour reforms have only been viewed in the context of what industry needs. Labour reforms should be for the benefit of the labour force. We should also look to expand the job/labour market.
With reference to undertaking visits to multiple countries together: I am from Ahmedabad, where we have a saying, ‘single fare, double journey’.
Note: Many of the statements attributed to the PM in this Ed.
were made during his recent interview with Hindustan Times.
Maybe it is time to wield the stick on domestic industry. It’s time to take back/cancel SEZ land wherever it has not been utilised or where an export project has not started for even 5 years.