Industry captains have said that one of the biggest constraints for India?s economic growth is high interest rates, and that the RBI should take measures to control supply-side bottlenecks rather than hiking rates. They were addressing the media at the India Economic Summit 2011.
?The biggest constraint that we have are high interest costs,? said Tulsi R Tanti, CMD, Suzlon Energy. ?Interest costs have risen seven times and are at 13-14%,? he said. The corporate world fears that high interest rates are impacting GDP growth rate and consumption-based sectors. ?The RBI needs to focus on easing supply-side constraints rather than rate hikes,? Adi Godrej, chairman, the Godrej Group, said. The RBI will have to address not just inflationary issues but depreciating rupee as well.
?Inflation has to be fought because it is affecting growth,? said Natarajan Chandrasekaran, CEO and MD, TCS. According to him, focus should be on domestic market growth as situation in Europe and other regions will remain sluggish.
?There are three constraints for bringing stability ? right policy, infrastructure development and need for huge capital,? said Tanti of Suzlon Energy. According to him, India was planning 20,000 mw of power capacity but has managed only 10,000 mw. ?The utilities are not stable enough to finance the need,? he said. The infra sector, especially conventional and renewable power, should be protected from high interest costs to develop power capacity, Tanti said.
Another concern is getting the right talent on board. ?The continuous flow of skilled people is a challenge,? said Jeffrey Joerres, chairman and CEO at ManpowerGroup. ?It is important to have skill building training for the manufacturing sector,? Godrej added.
India also needs to bring in transparency and accountancy. ?The right ingredients for democracy are full transparency, especially in the financial matters like delivery of money right till the grassroots,? Huguette Labelle, chair, Germany-based Transparency International, said.
