While many business heads say the Narendra Modi government hasn’t acted quickly enough, Sumit Mazumder, president of the Confederation of Indian Industry, tells Arindam Majumder it is wrong to expect radical changes after so many years of inaction.
Edited excerpts:
How would you rate the first year of the Modi government?
The government has done extremely well. Its first-year performance is much better than previous governments.
They've been able to create the right condition, right environment for a sustainable growth. Instead of working on quick gains, they have decided to set the stage right.
They have done quite a good job in terms of economic reforms and increasing the foreign direct investment (FDI) limits, which will increase the ease of doing business in the future.
Industry expected radical changes after a resounding majority.
Let us be practical. Exponential change after so many years of inactivity is not possible.
No government has a magic wand. You have to go through the pain before you get the gain. People’s expectations of an overnight change are not realistic. There have to first be some structural changes.
Take infrastructure. It can’t happen overnight. Today, the companies involved in infrastructure work are all broke due to the policies of the previous government, suffering from stressed balance sheets. So, even if the government is willing to give contracts, there are none to take it.
What has changed?
A big difference is that earlier, contracts were issued but land and environmental clearances were not obtained. It had to be taken by the builder himself. He knows his calculations in terms of building the road, not the duration it would take to get the clearances.
That problem has been resolved now, as the government has decided to get the clearances themselves. Now, they have to find a mechanism, some lifeline and start recovering the losses.
What do you think of the land Bill?
It is very fair to everyone. It will give four times more than the the market price. Also, land is not being taken for corporates. If acquired, it will be for public purposes like highways, bridges, low cost housing. They are still saying industrialists have to go and buy their own land. So, how is the bill anti-poor?
Shouldn't the government take the opposition on board?
Yes, there have been some lapses in communication. CII, as part of the industry, is constantly in discussion with the opposition, trying to convince them. We can only advocate and try. Some people told me you should spend more time with the Congress, explaining, than the government. That’s not possible; it is the government’s job to take the opposition into confidence. It is time that parties get together, set aside political issues and work towards development.
What are your views on the black money Bill?
The anti-corruption and money laundering bill is a positive thing and good for the country. What business is concerned about is that inspectors and officers should not target innocent people. That is the only apprehension. Unfortunately, this bill looks like you are guilty till proven innocent. We have taken up this issue with the finance minister, for clear directions, so that innocents are not harassed. The bill should be more transparent.
To what extent has the MAT (minimum alternate tax) issue affected investor sentiment?
When it was raised, my opinion was if tax is due, you have to pay. The thing is, these taxes should have been collected when they had to be. Since they were not, now it is looking as a retrospective application. In effect, it is not and the industry community around the world, without going into details, is getting jittery. There should be proper communication.
Are labour reforms pro-business?
No company hires people with an idea of firing them. But, if the business has failed, how is the company expected to keep the people? The unions have to understand that the reforms are not anti-labour. Once, the reforms are passed, a lot more investment is going to come in, as there will be better clarity for industrialists.
