India Inc happy with new laws in 2013; expects further reforms

NEW DELHI: The Indian industry was pleased with the government pushing through key legislations on Land Acquisition, Lokpal and Companies Act in 2013 and expects that the much awaited ones, including the GST, DTC and Insurance Bills to pass the muster soon.

"We would have liked to see faster progress on Goods and Services Tax (GST), infrastructure regulation, and ease of doing business reforms," CII President Kris Gopalakrishnan told .

Besides, the government took major decisions on establishment of National Investment and Manufacturing Zones, kickstarting of stalled projects by opening up foreign direct investment in various sectors like telecom, defence, initiating steps to boost exports and to check unwanted imports such as gold.

Also, greater clarity on GAAR rules and issuance of safe harbour norms for transfer pricing were positive moves. However, the industry felt that the Direct Benefit Transfer scheme to plug subsidy leakages should have started much earlier, not in the penultimate year of the government.

Meanwhile, macro data releases through the year indicated that downside risks continue to dominate. The much talked about green shoots were at best visible in parts, and appeared to be deceptive, even as no major steps were taken to spur demand and ameliorate investments. "The scorecard on reforms front has been rather below expectations," Assocham President Rana Kapoor said.

Moreover, little was done to make business environment in the country more conducive, industry leaders said.

A recent World Bank study ranks India at 134th position among 189 countries in terms of ease of doing business. Describing this as a "cause of worry", Ficci President Sidharth Birla said: "We should prioritise areas that would have maximum impact in terms of improving ease of doing business and give quick attention to these in a stipulated time frame.

Faced with the daunting task of lowering stubbornly high inflation, the Reserve Bank too did little to lift growth keeping interest rates tight and maintaining its hawkish monetary policy stance.

High cost of borrowing had a negative impact on demand and increased level of stressed assets, proving to be a major impediment to new investments and overall growth.

"Flagging demand due to inflation has hit industry hard. The administrative and bureaucratic procedures need to be time-bound and fast-tracked so that investments can be rapidly stimulated," Gopalakrishnan said. The upcoming Lok Sabha elections mean policy actions will be muted, with decision making moving at a snail's pace. The window for economic reforms, at least in the first half of the year, is rather small, he added.