FICCI praises Modi government's 1st year, says results would take 2 more years

Praising the initiatives the Modi government has taken in the past one year, Ficci today said it would take 18-24 months for results to be visible on the ground, even as the industry body noted that improving India's ranking in ease of doing business index is a "tall order".

Ficci President Jyotsna Suri said the Modi government in its first year in office had sparked a positive sentiment, restored investor confidence and established Brand India.

"Prime Minister's extensive international travels have brought a positive focus to India. Today, India's macro-economic performance is far better than what we had one year back.

"GDP growth has improved, inflation is considerably lower, fiscal and current account deficit are under control and we are seeing an influx of foreign investment into the country." she said in a press conference.

Suri, however, said it is a "tall order" for the government to improve the country's ranking on the World Bank's ease of doing business index.

India is ranked 142 in ease of doing business index. Government has taken several steps to improve 'ease of doing business' in the country.

"An action plan has been proposed for improvement in the regulatory environment and improving ease of doing business," Finance Minister Arun Jaitley had said earlier.

The seeds of development have been sown and it is just a matter of time when we shall reap the fruits of all these efforts, Suri said.

Comparing expectations from the Narendra Modi-government to "pregnancy of an elephant", FICCI past president R V Kanoria said it will take 18-24 months time for results of measures taken to be visible on the ground.

Asked whether tax terrorism was still a worry, Kanoria said: "It is something which is deep-rooted which needs to be rooted out. It is bound to happen if there is a desire and a will at the top, which is quite apparent that it is. Till that time when one sees it really happen on the ground, there will be talk about it."

Referring to the government's move to form a panel to look into the controversial issue of levy of Minimum Alternate Tax (MAT) on FIIs, Kanoria said: "The tax department is implementing the law and there are judgements on MAT which say that the tax department can actually raise the demand.

"But it does cause problems with investor confidence because any money which was not routed through tax havens actually gets taxed. So the perception becomes that the honest taxpayer actually is the criminal. I think there is a desire to correct this."

"Tax terrorism can only stop if complication in the law is reduced, if exemptions are done away with, discretion goes out of the system, because there is still too much discretion. I think these are areas which will get tackled," he added. 

On the issue of FDI in retail, Vice Chairman and MD of Bharti Enterprises Rajan Bharti Mittal said: "It is very clear that they (Govt) are continuing with the existing policy which allows 51 per cent subject to the state clearances."

"Investors will take their own call. The policy is very clear that the states will allow or not allow. So, if the states are not allowing it, you will not be participating in those states," he said.

Suri said that no government at the Centre has worked so hard in one year to reverse the spiral of negativity and brought in policies that will spur demand and growth in the very near future.

However, she said: "I don't think anyone can stand tall and say corruption is a thing of the past, although efforts are being made to bring in transparency."

The industry body said the government should now focus on raising farm productivity and formulate a water policy that ensures efficient and fair distribution of water for agriculture, industrial and domestic consumption.

On the question of Non-Performing Assets (NPAs) in the infrastructure sector, FICCI past president Naina Lal Kidwai said that infrastructure-related companies are over leveraged and would be unfair to bundle such projects which have accumulated NPAs due to fraud and other corporate malpractices.

"There is a need to sort out regulatory issues and unless that is done credit off take will not pick up," she added.

Asked about the Government's target to install 100 GW solar power capacity by 2022, Kidwai said: "The problem with the solar and power sector is that because public sector banks are absolutely full with power sector NPAs, there is no appetite to lend to the power sector.

"A 100 Gigawatt what we want to do with the country and it is a fabulous vision. However, to achieve it with the banking sector in the current state is not going to be readily done."

CII Director General Chandrajit Banerjee in a statement issued separately said: "In its first year, the Government led by Prime Minister Narendra Modi has turned around investor sentiment and taken strong action across multiple sectors for scripting a new growth narrative.

"Policies have contributed to infusing more competition into the market, harnessing new levers of growth, and dispersing more powers to state governments in the spirit of federalism."

"Combined with effective measures to tackle subsidy leakages, auction of natural resources and passing of critical legislation, these steps would aid India's GDP growth to accelerate to 8.2 per cent during the year," CII hoped.

Suzlon Group Chairman Tulsi Tanti stated that the Modi Government has been successful in putting India on the global map for investment.

Godrej Group Chairman Adi Godrej said: "The Government in the past year has taken unprecedented and innovative steps of a scale that could not have been envisaged earlier.

"They have succeeded in changing the economic calculus of the country by demonstrating that 120 million bank accounts can be opened at short notice or 4 lakh toilets can be built in schools in a year and so on."