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Focus on fiscal consolidation

Saturday, 17 May 2014 - 7:50am IST | Place: Mumbai | Agency: dna

Sunil Kant Munjal
Chairman, Hero Corporate Service Ltd

We haven't seen such a clear majority in a long long time. At this moment, we celebrate!

What are the thing that are required right now? The first thing that the government should do is to bring back the confidence of the people. Confidence itself is the important driver of decision making, for people making buzz of growth plans, etc.

Bring back the mood of the people to spend.

Capital formation in India has gone down quarter on quarter for 12 quarters now.

I think the government should focus on fiscal consolidation. They should bring down inflation just a bit, so that the growth starts. Now as a nation, we can partly afford to get away from these.

Now the (stock) market is also doing pretty well. However, some of the responses of the market are also an immediate response to the result of the election. The stock market, I think, has a headroom to grow for a couple of years, but I don't think a dramatic growth is good for any fiscal. I think rupee-dollar will find a new parity over the next couple of weeks. Don't forget we are a net importer while exporters get negatively affected. Oil, electronic hardware, edible oil... there are some massive imports.

On what went wrong with the UPA government, I am not sure if any one thing brings down the government. There have been multiple factors, over the last few years people have been blaming the government for either not taking decisions in many areas, of taking decisions and then going back on them. The fiscal headroom of India was very little, the revenue generation had not increased as much as it ought to have.

They lost the battle somewhere along the way.

Also, the fiscal intervention for the India enterprise and the global enterprise, especially when they made some decision on retrospective changes few years ago affected our reputation globally.

They held back a large number of decisions whether it was FDI, GST... Look at the way some of the bills got passed recently -- the land acquisition act, the companies act, they took such a long time. A long process, and they could never get it completed. And then, it was like a compromise.

First, the implementation was very poor. Two, even communication of some of the good policy making was was not done properly. However, I would say that the BJP should now rethink their position on the issue of FDI in multi-brand retail.

—As told to Priyanka Sahay

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