Ahead of the Union Budget, Adi Godrej, Godrej Group chairman and CII president, speaks about the slow rate of growth and the investment climate in the country. This session was moderated by Editor (Mumbai) P Vaidyanathan Iyer
P Vaidyanathan Iyer: What is your assessment of the economy today and what do you expect from the annual Budget considering there’s an election year ahead of us?
Adi Godrej: It is clear that the growth rate this year will be the lowest of the past decade. The government’s statistical department has projected it at 5 per cent and at best it will be 5.5 per cent. For a developing country at this stage of development, that’s an extremely low growth rate, especially since we have the potential to grow between 8-10 per cent very easily. It’s a question of the right policy, the right decisions and the right kind of governance. If the reform process is taken forward strongly, we can achieve a growth of above 8 per cent. For example, if we were to pass the Goods and Services Tax (GST), that alone from the next day would add 2 percentage points to India’s GDP, other things being equal. Other reforms like the Direct Tax Code or opening up FDI could be a multiplier factor. Another factor affecting growth is that decision-making in the government has become very slow. Many projects, especially in infrastructure, mining and power, get bogged down with clearances. Environment clearances have been very slow. Now a new Cabinet Committee on Investments has been formed which is going to look at large projects. The problem in our country is not the lack of ideas and thought but of execution. I hope for some good news on GST as the Bhubaneswar meeting was very successful and the finance minister has gone out of his way to see that the differences between the states and the Centre are sorted out.
The Budget needs to be growth-oriented and desist from things that create a negative perception of the country. Investments need to be handled very carefully. Negative decisions on any front tend to delay investment decisions. Many people told me after the last Budget that because of GAAR and the retrospective amendments, many companies worldwide said, ‘Put on hold anything to do with India’. Even now, income tax investigations are on, trying to find any old loophole to trap and collect more