It is a ‘myth’ that India’s labour is cheap and there is a need for lowering interest rates and logistics cost to make the domestic industry competitive, Assocham President Sandeep Jajodia has said. He said poor infrastructure, “extremely high” cost of power in addition to high interest rates are eroding the competitiveness of Indian industry. “We talk about cheap labour. I don’t think that is true. I don’t think we have cheap labour because the productivity of our labour is so low that where you require one person to do a job abroad, you probably have many people to do the same job. “I don’t think India has any advantage. In fact, it has a lot of disadvantages in terms of the ease of doing business, in terms of interest rates, infrastructure is a very big problem. Our infrastructure cost, our logistics cost is many times of what my competitor faces,” Jajodia told PTI in an interview.
The Assocham president said there was a need to clean up the balance sheets of banks and reduce the non-performing assets (NPAs) for credit offtake to pick up. He said the interest rates need to come down significantly and hoped the Reserve Bank will act in that direction.
State-owned lenders are presently saddled with bad loans amounting to a whopping over Rs 6 lakh crore. The government earlier this month empowered the RBI to ask banks to initiate insolvency proceedings for recovering bad loans.