Macro numbers continue reflecting distress; the pace of recovery is slow. India needs an urgent return to high growth. Such advocacy must not be viewed as mere promotion of business interests, but a basic need for job creation, without which we risk a fragmented and dysfunctional social order.
The freshly elected government faces unique challenges and opportunities. We need both short-term hits and long-term fixes. We need to work to enable enterprise across all sectors of the economy with the single-minded resolve of unleashing employment creation in ample measure. Enough jobs cannot be created in an environment which may urge, but does not truly enable, growth. One may have job-less growth, but not growth-less jobs. Right to employment is reduced to doles if there are no meaningful, productive jobs.
Without a strong manufacturing and services sector, supported by security blankets of energy, water and food, India cannot aspire to be a global power. Success in key areas must be our mantra. FICCI advocates a comprehensive, responsible agenda, addressing lowest common denominators rather than national aggregates. For instance?as in the first master “Bombay Plan” for India’s development?our principal objective can be a specific multiple increase in per-capita income over a 5-10 year period.
Our first attack should be on inflation which chips away at the net income of all persons. Persistent food inflation is a key factor which needs to be dealt with via large increase in agricultural production and productivity, perhaps unleashing a process on the scale of Green Revolution supported by prudent use of higher-yield seeds and other inputs. Infrastructure for storage and distribution is a pressing need to reduce post-production wastage. Resolving procurement practices and administered price mechanisms are clear short-term hits. In the long-term, addressing the product-mix in sync with changed diets will relieve price imbalances.
For expanding commerce, whether in organised, MSME, or service sectors, India needs humongous amounts of patient capital and must attract all forms of legitimate capital from domestic and global sources. Being friendly to capital is distinct from just inviting capital; India has been aggressive on the latter front, but not in enabling the former. ?Capital friendliness? does not compromise on national priorities, but implies stable and equitable policies and practices, that allow an acceptable risk-return balance.
Our financial sector makes funds flow to “real sectors” smooth. We must improve the health of and expand the banking sector. There is an urgent need to put into productive use assets financially impaired due to either slowdown or administrative actions and failures. Power and mining assets are examples; a six-month action plan must be charted.
A central employment inhibitor has been our senseless labour laws which encourage capital intensity over a prudent capital-labour balance. Since dismantling archaic laws will take time and effort, contemporary legislation encouraging incremental stable job creation, and grand-fathering older provisions for existing workers could be a quick hit.
Ensuring timely and transparent decisions is critical. Just as a corporate board is required to be in firm control of key decisions, the central Cabinet must be the single accountable point for decision making and monitoring implementation; delegations, such as a GoM culture must be abolished to demonstrate such bold intent. A systemic propensity to re-visit decisions on allegation, but without rigorous due-diligence, is detrimental, vitiating the decision-making process and deterring serious investors.
The much spoken of ?ease of doing business? must be addressed well beyond improving rankings on select indicators. Aggressive dismantling of business regulations is needed, keeping in view both relevance and multiplicity. Various regulators must be mandated to regulate their sectors with a ?development? mindset and not of ?control?; regulatory effectiveness must be measured by growth and health of the sector.
National competitiveness must be taken up in mission-mode, to act on key factors over 6-12 months. Goods and Services Tax is needed in an appropriate form equitable to states. To address potential difficulties in land acquisition after recent legislations, government can perhaps demonstrate the best way to acquire contiguous land for, say, extended railway, road or PSU projects without invoking special rights and on terms as applicable to industry.
We need mission-mode-plans for containing both fiscal and current account deficits. We must identify sectors of forex accrual for development, and devise emergency plans to boost coal and fuel output and mitigate imports over 24 months. Credibility issues in government finances must be addressed by evaluating the real picture, including off-balance-sheet items and articulate a mission to become revenue-neutral or surplus over 3-5 years. Widening the tax base and capping aggregate subsidies to ensure merit-based coverage can both be addressed. While no one makes a case against economically weak being supported via subsidies, it is also true that our social plans misdirect subsidies. A plan over 2 years to address this is now a must.
As also witnessed in other countries from time to time, an anti-business atmosphere is widespread nationally. One could almost be forgiven for beginning to think that India has a populace divided into extortionists and victims. While all walks of life can suffer aberrations, the cure lies in dispensation of justice and not tarring most with one brush. A burden must fall on industry, commerce and media to correct wrong impressions and negativity. Our society can move ahead only on positive sentiments and in being a jurisdiction where generating national economic wealth has a place of pride.
Sidharth Birla
The author is president, Federation of Indian Chambers of Commerce and Industry (Ficci)
