India's inability to reform is holding back growth: CII

According to him, the investor confidence is at a lower point than what the IIP numbers indicate. “The government needs to restore investor confidence and move swiftly on important economic decisions.”

Goods and Services Tax (GST), he says, will need much more political alignment than FDI. According to him, there is a low probability of GST being cleared this year.

Also read: India Inc fumes at holdback on FDI in retail

Below is the edited transcript of his interview with Udayan Mukherjee and Mitali Mukherjee. Also watch the accompanying videos.

Q: What's your response at CII? Is there a lot of disappointment or do you think it’s just a postponement which the government had to do to get some work done in Parliament and eventually maybe will be able to push through multi-brand?

A: It is a huge disappointment. There is no doubt about it. FDI in multi-brand retail is a very positive step for the whole country. It will benefit whole cross section of people. Therefore, it is a disappointment that it has got pushed back.

But I am hoping that it is not the end of the story and it will come back with some consensus as quickly as possible.

Q: What would sum up the mood for business right now? Are chins still hanging? We are looking at some really awful IIP numbers, but that often does not capture what investment sentiment is like. Would you say that it’s at the low point of this year where we stand now?

A: Yes. The investment sentiment and the investor confidence are at a lower point than what the IIP numbers indicate.

With reforms getting delayed, the investor confidence is at a very low level. Infact the investor confidence is even at lower level than what it was in the middle of the global crisis of 2008-09 and it’s very sad.

Q: Is it that the business leaders or CEOs are feeling that there is a lack of policy and therefore they should not be sticking their neck out and make commitments? Is it the global environment? Is it high interest rates? If you had to put a finger on the pulse of what's going wrong now, what would it be?

A: It is a combination of everything. The global scenario is one. But I am of the view that India can fix its own problems.

The inability to fix out problems, get reform process going, to take decisions, and put the economy ahead of politics are the factors. If I were to point out one element, which is the biggest element in lowering investor confidence, I would say it is India’s inability to take economic decisions.

We are making economies subservient to politics. That has never happened before. Ever since liberalisation of 1991, irrespective of which government was in power, we have always had a situation of reforms going ahead of political differences.

For the first time, the political differences have overtaken economy. It is sad to see the economic decisions are not being taken. Decisions, which affect the fundamentals of economy and growth of this country, are not being taken. That is the prime issue.