India Inc on Tuesday demanded greater monetary easing to bring down the cost of capital for businesses, and asked the government to create favourable conditions for domestic industries in global trade by allowing the rupee to depreciate.
In a brainstorming session with Prime Minister Narendra Modi, the who’s who of industries also asked for more improvement in ease of doing business. They also raised their pitch for expediting the introduction of the Goods and Services Tax (GST) in the meeting attended by Finance Minister Arun Jaitley, senior Cabinet ministers, top policy-makers and bankers led by Reserve Bank of India Governor Raghuram Rajan.
The topic was “Recent global events: Opportunities for India”, and Modi was keen on benefiting from the Chinese slowdown by stepping up investment in the infrastructure sector.
“It is a big opportunity for India as the cost of building infrastructure is going to be far less due to lower prices of coal, steel, cement and other commodities,” Jaitley quoted the prime minister as saying.
CII President Sumit Mazumdar, however, said the government had strengthened the economy’s foundation and that’s why it was not affected by the Chinese slowdown. “Global economic conditions are undergoing volatility and uncertainty, following market upheavals in China, devaluation of the yuan and slowdown in growth in many economies,” he said.
Among the industrialists who attended the meeting were Reliance Industries Chairman Mukesh Ambani, Tata Group head Cyrus P Mistry, Aditya Birla Group head Kumar Mangalam Birla, Sunil Bharti Mittal of Bharti Airtel and ITC chief Y C Deveshwar.
Besides Rajan, ICICI Bank CEO Chanda Kochhar and SBI Chairman Arundhati Bhattacharya and economists like Subir Gokarn and Chief Economic Advisor Arvind Subramanian as well as Niti Aayog vice-chairman Arvind Panagriya were also present.
In the meeting, Modi promised to expedite reforms to fight the China-led turmoil, but asked the captains of the industries to start investing to boost economic growth. “The industry must contribute to investment in India. Growth in India’s economy can only be achieved through teamwork, and all stakeholders must participate to build India,” he said. Ficci President Jyotsna Suri, however, said high cost of capital might dissuade the industry from investing just yet. "The prime minister said this is an opportunity for us to take advantage and invest. However, the cost of capital is too high, and I don't know how many people can take the risk and invest. Many of us raised the issue of interest rates,” she said.
According to Assocham President Rana Kapoor, Modi said the private sector had a greater risk-taking appetite and that it should not shy away from doing so. Jaitley, meanwhile, assured the industry the Constitutional Amendment Bill to roll out the GST would be passed by Parliament “sooner than later”. The industry also discussed the possible slowdown in the agriculture sector following a weak monsoon forecast. They wanted the government to take steps so the rural demand was not affected.
