'Dramatic government decisions needed to boost investor sentiment'

MUMBAI: Government needs to take some "dramatic" measures like tax cut to boost overall business sentiment in the country and to facilitate capital inflows, Ashok Leyland Managing Director R Seshasayee said.

"Growth cannot be taken for granted and the Government needs to take some "dramatic" steps like tax cut to boost the sentiments," Seshasayee told reporters here.

Voicing concern about future growth, he said growth rate won't go up any higher as the investment pipeline is low and capacity building is not there.

" Power sector is in a big mess. There is no power for creating extra manufacturing capacity. This is not the same situation as 2008, but sentiment is as low as then, so some drastic decision is needed. We need to push infrastructure."

Seshasayee said "policy paralysis" is a matter of concern for corporate India as it is affecting foreign investment. "Politicising of every issue is sending a wrong signal to overseas investors. We cannot expect any investor outside the country to have confidence in governance."

About depreciating rupee, he said to some extent it is a buffer against high cost economy. "But overall depreciating rupee is not a good thing. It will see some flight of capital so we need intervention to prevent further depreciation."

The falling rupee is likely to have some impact on auto industry as a lot of companies are dependent on import for components, he said. "We will see squeezing of margins for auto companies, which is not a good sign."

On RBI taking steps to check rupee depreciation, he said it is a good time for the apex bank to indicate pause in the policy. "Its a bit too early for RBI cut interest rates. However, there is a need to be worried about the rapidly depreciating rupee," Seshasayee added.