India Inc sees recovery, but onus is on govt

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Bangalore, Jan 6: At a time when the countdown to the Budget has started, India Inc is also finally seeing some signs of silverlining on the economic horizon. A majority of the chief executives, however, feel that if there are no other major adverse external factors like a military intervention with Pakistan which has eased off now, a recovery will be in place by the middle of ’02. This was the majority view of 50 CEOs polled and interviewed by The Financial Express, across the country. But these CEOs say that the onus of economic development falls on the government this year as well, for they feel that strategies which the industry will take itself may not be sufficient to propel it onto the growth path.

CII director general Tarun Das says, “signs of recovery have already started. To take the country once again to a sustained growth of over 7 per cent, there is an urgent need to accelerate the process of reforms and decisions.” Dabur chairman Vivek C Burman adds, “we expect the Budget to play a crucial role this year. The industry is looking at a good Budget followed by stability at the macro level to bring back consumer confidence and increased spending.”

“The government seems to be working towards helping in the recovery,” says Assocham president KK Nohria. If so how then can the government help?

Mahindra & Mahindra MD Anand Mahindra has a focus area. He for one, feels that agriculture should be a top priority area for the government this year. A major thrust should be on constructing roads in villages, says he, and points out, “there is a strong evidence to suggest that the biggest multiplier in agriculture income comes from investment in rural roads.”

On the other hand, the Chennai-based Sundaram Finance managing director GK Raman feels that if the business confidence has to improve, the government will have to address divestment more seriously and vigorously. While Alembic chairman and a key Ficci figure Chirayu Amin echoes the same view, he also feels that the Budget should facilitate more investments.

L&T chief AM Naik wants radical changes on the direct taxes front. He says the Budget can be a major instrument of recovery this year if changes are brought in on direct taxes. His recommendation: eliminate the multiplicity of schemes and rationalise tax slabs to increase tax mop-up. But P&G Hygiene and Healthcare chairman Bharat Patel differs. He feels that the Budget can play a crucial role if taxation rates, particularly relating to incremental investment and indirect taxes are reduced. Mr Patel also hopes the Budget will contain a slew of policies on labour laws and SSIs, amongst others.

But Stic Travel group chairman Subhash Goyal is more cautious. “It is a big challenge for the finance minister to balance the Budget this year,” says he. That then is the bottomline: there are no easy answers, but India Inc says it will rise to the occasion to take advantage of the silverlining with some help from the government.