The Confederation of Indian Industry has urged all stakeholders to create better sentiment about the Indian economy for foreign investments to flow.
“Labour violence in Manesar, the grid failure and proposed amendments in GAAR (General Anti-Avoidance Rules) have created negative sentiments with respect to investments in India. We need to create better sentiments for FDI to come,” said the CII President Adi Godrej.
“Do not talk about what is going wrong. The Government is taking steps on the power situation and labour unrest. Talk about the future and what we as an industry can do better to improve productivity and efficiency,” said Godrej, adding that the Indian economy is structurally strong and this must be propagated.
Godrej hopes the Indian economy will be back on the growth path next year. GDP growth during 2011-12 plunged to 6.5 per cent, from 8.4 per cent in the previous year. Quarterly GDP fell steeply to 5.3 per cent in the fourth quarter, from 8 per cent in the first quarter.
The CII President called for economic revival through reforms and governance. Reforms such as the Goods and Services Tax, the Direct Tax Code and FDI in aviation, retail, pension and insurance must be accelerated, urged Godrej.
FDI in modern retail would strengthen logistics and the back-end chain from farmer to consumer. This would reduce wastage and lower costs, he said.
Godrej said power was one of the reasons for the economic slowdown. Despite building significant power capacity over the years, it has remained idle due to a shortage of fuel. “Coal production must be increased; the private sector should be allowed in coal supply. It is a shame we have to import coal.”
The rupee, Godrej said, must remain “reasonably strong.” A weak rupee adds to inflation by making imports more expensive; competing Indian products too become dearer. “We hope the RBI creates policies to control rupee depreciation. Interest rates must also be brought down and the fiscal deficit controlled.”