'Companies should be headed by young people'

Tata Steel Vice-Chairman B Muthuraman, who is also the chairman of Tata International, has taken charge as the Confederation of Indian Industry president at a time when several key policies have been put in place.

In a conversation with Nayanima Basu, the trusted Tata hand says many key reforms remain pending and those will be his focus. Edited excerpts:

The first item in your five-pronged strategy for growth – fast-track implementation of 100 mega projects – includes an offer to work closely with the government. This was CII's approach in the early years of economic reforms. Later, it moved away to focus on industry issues such as quality. Is the industry association going back in time?

The emphasis on industry was the right step because in 1992, after 45 years of administrative control, Indian industry was not competitive. A lot of effort was, hence, put in by the industry and CII to improve competitiveness and productivity.

As a result, many Indian companies improved tremendously. However, we have been working with the government and will continue to do so.

In areas of Goods and Service Tax (GST), International Financial Reporting Standards and competition law, we are working closely with the government.

Several key policy changes have already taken place and industry chambers can no longer spend their time doing old-style lobbying. Is working with the government a part of CII's effort to find more relevance in the current scenario?

Even now there are a lot of reforms to be done.

Which are…?

Financial sector reforms, labour reform, etc, need to be done. There is still enough scope to work with the government to bring forward a series of reforms.

Recently, we have seen the issue of succession gaining significance in various companies and groups. Is CII looking to evolve a succession policy for the Indian industry?

It is an area we are looking at. CII is concerned, but many Indian companies today have a good succession plan in place. Indian industry has been competitive only in the last 20 years or so and we have come a long way in these years. But a succession plan is a fairly new concept.

We need to first give priority to some other important issues such as affirmative action, skill development, growth of manufacturing and getting the mega projects off the ground.

What are your views on lowering the retirement age as announced recently by the Tata Group?

It is a good thing to retire early. India has a vast population of bright young people. Their time will never come if people do not retire early.

Nowadays, businesses have become very competitive and demand high levels of energy and intellect.
So companies need to be headed by these young people. I also believe that physical age and mental age are different things. There are certain basic norms and, thereafter, we should go forward with the idea of promoting the youth.

Recently, Mohandas Pai argued that ability and performance should be the biggest considerations in succession.

You have to go with whoever is the best guy. Age should be secondary. But after a certain age, many people would not have that much capability, so the basic norms have to be followed.

You said the Reserve Bank should moderate its monetary tightening. You also said inflation was a cause for concern. How would you reconcile the two?

In the last one year, interest rates have been raised by 200 basis points, primarily to contain inflation. But still the rate of inflation has gone up to nine per cent.

The reason is not domestic; external factors need to be blamed such as crude oil prices and high commodity prices.

These are bigger reasons. With a rise in interest rates investment slows down, which is happening now. I think interest rates have gone up enough. Inflation can be controlled by structural measures such as agricultural productivity, farm mechanisation, supply management and distribution mechanism.

Introduction of GST can push our growth rate up by 1-1.5 per cent. These measures should be given priority.

You have asked your member-companies to prepare a quarterly report on affirmative action. Would you be open to a mandatory requirement by the government?

I have promised the government to send a quarterly report. But making it mandatory would not get it done well.