SME Times News Bureau | 13 Jun, 2019
new government led by Prime Minister Mr Narendra Modi is aware of the
challenges posed by the recent growth slowdown due to the global as well as
domestic issues impacting the economy. FICCI President Sandip
Somany in an interaction with the FICCI in-house publication Business
Digest says that with the NDA government getting a bigger mandate in
the Lok Sabha elections, the industry is expecting bold reform measures to
overcome the existing challenges, including the rural distress and
job-creation, and push the economy to a higher growth trajectory.
from the Interview...
according to you should be the agenda for the new government?
Somany: FICCI from its side has submitted a
robust agenda for growth to the government comprising measures to address the
challenges and improve the business environment. The six key points of the
agenda are passage of the pending Bills, announcement of policies (including
E-commerce, Industry, Retail and E-pharmacy), simplification of GST, lowering
of interest rates, addressing farm distress and creation of an eco-system that
immediate window to address some of the issues is Budget, that is to come in
July. What should be the priorities in the full budget?
focus of the government in the Budget has to be on spurring investment. Cost of
doing business is very high in India and while there is a need for reducing the
interest rate by at least 100-150 basis points, the corporate tax rate too must
be cut for all the companies to 25% from the current 30%. There is also a need
to review the MAT structure, which is too high. Further administrative
simplification in the GST and other laws to improve the ease of doing business
scenario is also required.
government also needs to have a reform roadmap. Isn't it?
The government during its previous tenure succeeded in bringing in critical
reforms, including GST, RERA and IBC. It is time now to not only work towards
the required modifications in them, but also usher in the next wave of reforms,
especially in the important areas of land, labour and judiciary. While the
reforms in land and labour laws are pending, though India has improved its rank
by 53 positions in last two years and 65 positions in the last four years in
the World Bank's ease of Doing Business Ranking to reach 77th rank
among 190 countries in 2018, its rank in enforcement of the contract is very
poor at 163. The Micro, Small and Medium Enterprises (Amendment) Bill is also
an important legislation that will redefine the way this critical segment is
treated. Similarly, policy measures like the 'New Industrial Policy and
e-commerce policy among others, will also help in improving the business
environment in the country.
in the financial system is a big concern. How should the government address
liquidity issues with regard to NBFCs are resurfacing. The government
needs to work with RBI to take care of the concerns so that the apprehensions
in the credit ecosystem subsides quickly. There are steps that are being
discussed currently by the finance ministry and RBI to improve the sentiments
in the market and we are optimistic that the liquidity concerns can be managed
with the help of concerted efforts.
there is investment revival, high growth trajectory can't be attained. What
should the government do here?
is exactly why the new government needs to plan a robust reform agenda that
would not only boost consumer sentiment, but will also create conditions for
higher private sector investments and exports. The factor market reforms along
with the steps like reduction in interest rate and corporate tax rate will
bring down the cost of doing business substantially, which at present is quite
high as compared to the countries which are competing with India. These
enabling steps spur investment and also boost consumption.
distress is also another area of concern. Though government announced direct
income support scheme, this is clearly not enough to handle farmers' problems.
Direct Income Support Scheme introduced by the government is a step in the
right direction and it needs to be further strengthened. However, the real
solution to the rural distress and farmers' problems lies in the creation of a
strong infrastructure to support agriculture, including irrigation and
warehousing facilities. Besides, the reforms associated with agricultural
marketing also need to be pushed so that farmers' cost of production and
selling is reduced. These reforms, though depend on the coordination with the
states and the success of GST can be replicated here. Value added products have
to be produced in agriculture. Exports of agri products should be encouraged.
the area of job creation, a comprehensive strategy is required. What could be
the key ingredients of such a strategy?
of adequate and quality jobs is one of the key challenges for the new
government. We have about 10-12 million people joining the workforce every year
and with a labour force participation rate of about 0.5 to 0.55, the country
needs to create about 6-7 million jobs annually. If we account for the backlog
of the unemployed, we possibly need to create as many as 8 million jobs
annually. We also have to put in place a robust system for capturing the jobs
data so that we have an accurate estimate of jobs that are being created
with the support of the MSME sector, the government must focus on the new age
business like online aggregator services and applications like Ola, Uber,
Zomato and Swiggy, and also the start-up domain for creation of more jobs.
Also, labour flexibility has to be brought in.
a strong backbone for supporting entrepreneurial ventures is in place along
with the skilling and re-skilling ecosystem and a flexible hiring framework,
pick up in investment will have a multiplier effect on job creation, and that
is what the government should target.
of a separate ministry for employment will help coordinate these efforts