ET Global Business Summit: Biz leaders exude positivity, govt going in right direction to push growth

NEW DELHI: The Narendra Modi government has revived global interest in the India growth story and it can help attract plenty of investment if it improves the ease of doing business in the country, top industrialists and global thought leaders said at the ET Global Business Summit in Delhi on Friday.

Taking part in a discussion on the new imperatives for relaunching the Indian economy, top economist Jagdish Bhagwati, Boston Consulting Group chairman Hans-Paul Burkner, Bharti group chairman Sunil Bharti Mittal, Max India group founder and chairman Analjit Singh and Biocon founder Kiran Mazumdar Shaw opined that the government is going in the right direction to push growth.

Bhagwati said the government will reinforce demolition of the licence raj, kicked off by India when it liberalised its economy in 1991, and accentuate opening up of markets as free markets are the best antidote for an environment beset with “rent-seeking policies”. “Expose evil to sunlight, it will shrivel up and die,” said the professor of economics and law at the Columbia University.

Differentiating India and China’s growth stories on the basis of the sort of corruption they bred in recent decades, Bhagwati said, “Corruption in China was pro-growth, where the sons and daughters of Communist party members and leaders had a stake in new investments and reforms. Our corruption was more about creating rent-seeking opportunities and monopolies based on a system full of licences.”

The economist, who has mentored Niti Aayog vice chairman Arvind Panagariya, expressed that the Modi government would bring in reforms with greater energy, speed and determination that the previous regime. “In the Manmohan Singh government, one minister asked me to chair a panel on using IT in primary education. I agreed, but never heard back from them for two years. This would never happen under this PM,” he said.

Boston Consulting’s Burkner suggested that to attract big investments, India should make local and global investors speak about their good and not-so-good experiences at global events, rather than sending big official delegations abroad and showing videos highlighting opportunities in the country. “Let people talk about their own examples and their experiences of change in the country,” he said.

Also, India should ensure speed, stability and flexibility, he said. “If India and its states can ensure these, there would be lots of foreign investors in the country. The proof of the pudding lies in the eating,” Burkner said. “Companies like to start production within two to three years of taking the decision to invest, want to know what conditions are, make sure they are not changing, and want to be able to expand or cut back production quickly,” he said.

Burkner said the next two years will show if the renewed investor enthusiasm about India would translate into investments.

Sunil Mittal said the NDA government had come with a fortunate alignment of the stars and “opening scenes” of its innings have started well. “India has again become a growth story to talk about and is no more hobbled by the blockages seen in the UPA government,” he said.

“We have a hard working government committed to the benefit of all sections of society in the nation. If all this would not help India reach its potential, I suspect we never will,” Mittal said. Analjit Singh commended the government for taking the ordinance route to raise the foreign direct investment cap in insurance ventures, which has been hanging fire for 13 years. “FDI is not the only precursor for the re-takeoff of the insurance industry,” he said, adding that though the sector is the second largest employer in the country, it needs a more favourable tax and regulatory regime.

“To punish the industry by taxing it in the same way as a manufacturing firm and frequent changes in policy make it difficult to grow and encourage a business,” Singh said, pointing out that insurance firms’ profits are always re-invested into the economy in long-gestation projects that lack adequate long-term financing.