Policy paralysis was the catchphrase India Inc. used to describe the state of functioning of the country's government over the last couple of years. Amid allegations of corruption and, in former Prime Minister Manmohan Singh’s own words, the pressure of coalition politics, growth slumped to new lows. The global macroeconomic condition didn't help either.
With the BJP-led National Democratic Alliance (NDA) poised to take charge at the Centre, Indian firms and business leaders are enthused at the prospect of having a stable government. They expect the Modi-led government to jumpstart a slew of reform measures and revive the economy to the levels of the 8-8.5% growth that they once saw.
Harsh Goenka, chairman of the Mumbai-based RPG Enterprises, said corruption within the country had, in the last few years, reached the “heights never seen before.” One of the ways to overcome this problem was to maintain consistency in policy making and move away from an ad-hoc approach to decision making, Goenka said.
According to Adi Godrej, chairman of the Godrej Group, the key priorities of the new government should be to improve the ease of doing business in India, “which was never very good but further deteriorated during the last three years.”
One of the biggest bones of contention between the UPA-led government and several multinational companies such as Vodafone, Nokia and Royal Dutch Shell has been the issue of taxation, often retrospective in nature, leading to long-drawn litigation.
Solving the tax disputes with foreign and Indian investors as a result of retrospective amendments and transfer pricing interpretations should also be one the immediate key agendas of the new government, Godrej said.
At least a dozen industry leaders that FE spoke with agreed that key tax reforms that have been on the anvil for years now such as implementation of the Direct Taxes Code (DTC) and the Goods and Services Tax (GST) needed to be expedited at the earliest. Godrej said that the implementation of these tax reforms could add as much as two percentage points to India's Gross Domestic Product (GDP) growth.
Relook at policies
One of the rare points on which Modi's predisposition may have disappointed some businesses has been reservation against allowing FDI in retail. "The entire retail policy needs to relooked,” says Kishore Biyani, founder and group chief executive of Future Group.
“Everywhere else it segmented into supermarket, hypermarket, and so on. We need to look at retail the