PM Modi calls on India Inc to unleash animal spirits and boost investments

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August 12, 2021 4:30 AM

The Prime Minister pledged to do more to ensure greater ease of doing business in India but wanted the private sector to pitch in as well.

The prime minister said the country’s start-up eco-system has also matured today. From about 3-4 unicorns 6-7 years ago, India now has about 60 of them.The prime minister said the country’s start-up eco-system has also matured today. From about 3-4 unicorns 6-7 years ago, India now has about 60 of them.

Prime Minister Narendra Modi on Wednesday called on corporate India to awaken its animal spirits and boost investments, taking advantage of a raft of reforms undertaken by his government in critical areas ranging from corporate taxation to labour laws. Calling for further bolstering the partnership to realise the goals of self-reliance, Modi said the economy has again gathered steam after a Covid-induced slide. The latest move to junk a 2012 retrospective tax amendment will correct a historical blunder and boost investors’ confidence in the country’s tax regime, he said at the CII’s annual meeting.

Listing out a series of reforms undertaken in recent years, the prime minister said the corporate tax rate has been slashed (to just 15% for new manufacturing units), dozens of offences under the Companies Act have been decriminalised and a maze of complex labour rules have been compressed into just four codes to ensure ease of doing business. The role of the private players in nation-building is being promoted by reducing the overbearing presence of the public sector even in strategic sectors.

The Prime Minister pledged to do more to ensure greater ease of doing business in India but wanted the private sector to pitch in as well.

“The reforms we have brought in are not ordinary; these were talked about for ages but never attempted,” he said. In probably a veiled reference to the 1991 reforms in the wake of the balance of payment crisis, which, critics argue, had to be undertaken out of compulsion, Modi said: “We are not undertaking reforms under any compulsion but reforms are a matter of conviction for this government.” The GST was stuck for so many years (before its rollout in 2017) because the earlier governments could not muster the courage to take political risks, he said.

Commercial coal mining has been given a leg-up; the space sector has been opened up to the private sector; faceless tax assessment has been introduced; and the red tape that had marred the country’s business prospects for decades have been drastically removed. India, which was once apprehensive of foreign investment, is welcoming investments of all types today, the Prime Minister said.

The government or the public sector alone can’t catapult research and development activities to the desired level; the role of the private sector is critical in this sector.

After a 7.3% contraction in FY21, the economy is expected to grow at 9-11% in the current fiscal, as the impact of the second wave wanes, according to various estimates. To push growth, the government has budgeted a 30% rise, year-on-year, in capex to Rs 5.54 lakh crore for FY22. In the first two months of this fiscal, budget capex has grown by 14% from a year before, and large CPSEs have also acquitted themselves well in sticking to their investment targets, thanks partly to constant prodding by the government. However, it needs massive private capital as well to drive growth.

The prime minister said the country’s start-up eco-system has also matured today. From about 3-4 unicorns 6-7 years ago, India now has about 60 of them. Out of these 60 unicorns, 21 emerged in the last few months. Many of them have diverse interests. Investor response has been tremendous for these start-ups and this signals that the country has extraordinary opportunities for growth, he added.

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