CNBC-TV18's Ronojoy Banerjee caught up with Shobana Kamineni, President of Confederation of Indian Industry (CII), from the sidelines of World Economic Forum India Summit.
She said that anxiety around goods and services tax (GST) was expected but for the short-term.
According to her, festive season sales boosting white goods and fast moving consumer goods (FMCG) sector.
Q2 will look better but fundamentals need to pick up, she mentioned.
Below is the verbatim transcript of the interview:
Q: What are your views on Prime Minister Modi's outreach to the businesses?
A: It is always welcome when the head of the country reaches out and talk to all of us. There is a bit of reassurance. However, there was never a sense of panic. I always said that it's just not crisis; some amount of anxiety. The anxiety is natural, everyone expected it with goods and services tax (GST) but that was short-term. In the medium-term, outlook always feel good and the PM just reiterating some of those points, shows that we are on the same page.
Q: What is your sense now of the second quarter because if we look at the numbers, cars sales continue to be robust, tractor sales are growing, commercial vehicle volumes are growing, so one would get an impression that the consumer durable sector is doing well. What is CII's sense? How do you see Q2 panning out vis-à-vis Q1 which pretty much was a disaster?
A: The first sign is FMCG and that is the one that is a harbinger of how it is going to look and actually FMCG sales have been trending. This is of course the festival season and it is helping the other parts of that like the white goods, the consumer and all the other sectors which is related to the consumer. So Q2 will look better but the thing is that the fundamental still need to get done; we need those banks recapitalise, we need to have the non-performing assets (NPAs) resolved. I only wish if we had some good interest rate; the rupee is too high. All these, they will get settled, but Q2 definitely be better.
Q: Any number the CII may be working with right now as far as Q2 is concerned?
A: I kind of agree that it will be definitely one percentage point up from last quarter. So hopefully it will be 6.7. I do not think it will be 7. Somehow we are not looking at those numbers anymore. Everyone has got their heads down and they are working in their own industry. The gross domestic product (GDP) issues have become the focus -- we focused too much on GDP and took our eyes off the ball. We need to get back into our companies, get working and create jobs.
Q: The finance ministers will also be here (at World Economic Forum India Summit) later, what is that one question the CII President is going to ask?
A: When are you going to do the privatisation that you promised of banks, Air India, some of the insurance companies? Get money back in, I will ask him that and if I get a second question then - are you going to be fiscally disciplined.
Q: But CII has asked them that you can give a leeway of 0.5 percentage point.
A: But the whole thing is that it has to be done within a framework because we do not want the states to get profligate. Elections are around the corner, so let us not throwaway the whole thing. So that is what we do not want. We want it to be cautious but we realised they need spending. Let's get revenue up.
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