We Will Take Townhall Approach To Build Consensus Over VAT: Mahindra

New Delhi, May 1: | Updated: May 2 2003, 05:30am hrs
Confederation of Indian Industry (CII) wants to take the lead in bringing together the Union government, state governments and all segments of industry and trade to resolve the impasse over value-added tax (VAT) after finance minister Jaswant Singhs announcement on Wednesday that VAT will not be implemented from June 1. We will take the townhall approach to build a consensus over VAT, CIIs new president Anand Mahindra told FE.

CII president Anand Mahindra with Prime Minister Atal Bihari Vajpayee at his residence in New Delhi on Wednesday.
Stating that corporate governance will be on top of CIIs agenda, Mr Mahindra said CII would not like to be associated with members (companies and industrialists) who intentionally flout good corporate governance practices.

One cannot blame managements who are victims of the vagaries of business, but anyone knowingly flouting any rules is a different matter. Confederation of Indian Industrys corporate governance code predates that of Sebi and Naresh Chandra committee, and we have been encouraging our members to follow the same. We even have an advisory for members on this subject. While CII does not have any rules in place for willful defaulter members, we definitely will look at introducing one, he said.

While commenting that the outlook in the Bombay Stock Exchange was to hasten slowly in more reforms, and at a time when India was becoming an option to China in manufacturing, Mr Mahindra expressed the hope that we do not see any more artificially induced scams in the market.

Mr Mahindra added that CII has had its share of differing points of view in the past with some of the political powers-that-be, which has implications on relationships industry bodies have with political parties.

This also opens up the debate of whether democracy is an impediment to economic growth, or one needs a system like China where reforms are pushed through.

The CII president also feels complaints of foreign companies about complicated tax structures and procedures as well as the bureaucracy are not something we need to worry about.

We need to wait for a time what CK Prahalad describes as the bottom of the pyramid market exploding. If we can achieve 8 per cent GDP growth on the current base of $450 billion (Rs 20,00,000 crore), then we will be a market no one can ignore. Then all these complaints will vanish and businesses will finds ways to overcome these problems, he said.

He added, There are enough problems in doing business in China, but we do not hear one complaint. If the market size in that country were to shrink to one-tenth, then suddenly everyone would talk of all kinds of problems.

Mr Mahindra said that in his new role, he sees CII as a facilitator or catalyst for economic growth.

We are working in a democracy, and there would be conflicts arising from multiple points of view. In a democracy, the government would always be relevant as a facilitator and enabler. If we can upgrade the quality of dialogue, we can have a sound conflict resolution mechanism in place. In such a case, democracy will at least cease to be an impediment to growth, he said.

The role of CII is to give a structure to the mechanism of conflict resolution. For that we need all parties concerned to have a common goal in the first place. Once this goal can be defined, we we can start talking to each other, rather than at each other which is what we are all doing at the moment, he added.