Golf courses are abuzz with discussions on what the new government ought to do. It's where the bureaucrats and CEOs cross fairways and share the 'lobby' newsflow. For this week's column – given that it's out on the day the new PM is sworn in – I reached out to an old hand in corporate India Harsh Pati Singhania to put spotlight on the big-ticket items Modi could sort out. The good part about talking to Singhania is that he doesn't just talk of his own businesses but the checkpoints that will help tee off the investment climate itself. And he does well to point out the one golf lesson than can be equally applied to the economy – that of consistency. India does need certainty in policy to keep investment stability. Here's my chat with Singhania.
What is the single-most important thing you think the new government needs to do for business?
The top-most priority for the government should be to revive economic growth. The sharp slowdown in the last 2-3 years has seriously eroded competitiveness of India's economy, particularly in manufacturing. It is therefore imperative for the new government to restore competitiveness of Indian economy and improve 'Ease of Doing Business' in a transparent manner. The government's focus should be on effective implementation of existing policies as well as clarity and certainty of Policy. A consensus on GST must also be evolved.
How can infrastructure be revived?
Infrastructure investment has seriously lagged and this has put enormous pressure on the existing capacities, resulting in significant deterioration in their service quality. To revive infrastructure developments the government needs to fast-track process of project clearances by setting up a single window cell which would expedite matters pertaining to environment clearance and land acquisition for industrial purpose. Also, pending projects like the dedicated freight corridors that have been in the pipeline for quite sometime and infra projects, particularly in power and road sectors, need to be put on the quick-execution mode. This can be achieved only if there is more inter-ministerial and inter-department coordination that can help overcome regulatory bottlenecks.
Would it be fair to say that the government is starting on a strong wicket because the economic problems have bottomed out?
It is not true to assume that economic problems have bottomed out as we are still saddled with macro problems like sticky inflation, particularly retail (CPI) that is keeping interest rates high, artificial correction of fiscal deficit by curtailing capital expenditure and postponing oil subsidy payments of last year to current fiscal, and bringing down current account deficit by curbing gold imports. The new government would require to take some hard decisions.
What kind of outlook do you have for sectors like cement and tyres?
As infrastructure development is likely to be the prime focus for the new government, both pending projects as well as new ones need to be addressed on a priority basis and this would ensure improved prospects for the cement sector. Reviving the housing sector would also give further impetus to it.
The economic slowdown has significantly dented the fortunes of the vehicle industry.
With economic growth likely in the next few quarters, demand revival will be manifested in consumer durables, particularly in automobiles, which would have a positive impact on the tyre industry. Emphasis on infrastructure in terms of development of roads will also increase demand for tyres.
What do you think can be done to steer the economy back to 9% growth?
With agricultural contribution only about 13% of India's GDP and services growth saturating of late at 7-8%, it is imperative that manufacturing revival takes place at the earliest to push growth to 9%. This will not only help create jobs and absorb the huge influx of new labour due to the positive demographic dividend and boost domestic demand, but also provide a big fillip to our exports. A blueprint is already in place in the form of the National Manufacturing Policy (NMP) and so the new government must pursue it in right earnest.