GST will add 2% to GDP, must implement by Apr '15: Godrej

Going ahead, he is confident of getting back to 8 percent growth rate by second half of FY16.

Below is verbatim transcript of the interview:

Q: First your overall assessment and if you have to rate the Modi government on a scale of one to ten in terms of their performance in these 100 days, how would it be?

A: It will be about eight and half.

Q: Any qualitative assessment that you would like to add on it in terms of the key hits and misses that you thought were most prominent in the 100 days?

A: It is very clear that the new government has declared that it would like to reform the economic policies of the country. They would like to improve the ease of doing business in the country and see that the gross domestic product (GDP) growth is restored back to a high level.

So most of the actions they have taken, most of the pronouncements they have made especially the independence day speech are in those direction and I am very enthused and do feel that India will get into a period of rapid economic growth.

Q: So far we have seen the intent of the government. Over the next few days and months what do you think should be the top two or three priorities that the Modi government should work for?

A: Some of the problems that have kept investment from being attracted to India such as the retrospective tax amendments, the GAAR problems, the transfer pricing problems should be dealt with.

Already the finance minister has announced that he is very clear, he does not want to have any such provisions in the future but some of the problems created by the amendments already made need to be dealt with so that people feel safe in investing in India.

Ease of doing business must be improved; permissions that have taken too long, it is very difficult to operate in these conditions, people lock up funds for very long periods of time and that must be resolved at an early date. The whole taxation process should be looked at.

Sometimes lower rates of taxes are successful in getting much higher collections of taxes because it leads to accelerated growth, that should be looked at and implemented and most importantly the GST should be implemented by April 1 (2015). That in itself will add 2 percent points to India’s GDP growth rate other things being equal.

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Q: We have done a poll that shows that one area where Modi government has been rated quite low is their ability to tackle food inflation. Would you agree with that and do you think some more steps are needed to be taken in that direction?

A: I don't think any government can contain food inflation which has been high for quite some time within 100 days. That is too short a period but some of the steps they have taken as far as food inflation goes will also help.

The monsoon is not doing too well, that could be an issue. But they should have a plan to contain food inflation, they should have a six month plan and I am sure they will take things forward. The APM Act needs to be revisited and various other supply side issues that come in the way of fruit and vegetable prices being under control should be looked at.

Q: You did mentioned GST and that it should be implemented by April 2015 but do you think that the new government has done enough in terms of at least initially getting GST in terms on track to possibly see the light of day?

A: A couple of meetings have been held. The finance minister himself has met the state finance ministers. There are some issues that need to be resolved but I don't think that should be a problem. Government should go out of its way to see that the states are satisfied about the final GST legislation. It can be done and I do hope it will be done.

Q: Overall, you did say that ease of business must be improved going forward and I read a couple of reports where you have indicated that as well. So that is something which is very close to your heart and is a priority for you but overall I wanted to actually just focus on execution of projects on the ground. Has execution picked up at all, has capital expenditure (capex) picked up on the ground at least?

A: A bit. Capex has not actually picked up on ground but the intention for capex has definitely picked up and capex will come automatically as soon as GDP growth picks up.

So the single objective should be to get GDP growth to pick up or at least investors must feel that GDP growth is going to pick up. I expect growth will be much better this financial year than last year but we must have a program and it is not difficult to do to get back to an 8 percent plus growth rate by the second half of the year 2015-16.

Q: In terms of the reforms that the government can take one area that has been spoken about is fuel pricing. We have been lucky that crude prices have come down quite significantly, do you think time has come now to go for a complete deregulation of diesel and maybe with a slow deregulation of liquefied petroleum gas (LPG) and kerosene as well going forward?

A: Yes, this is the right time to do that because crude prices are coming down, they may even come down further. So this is a time to take such a decision because in case there is international inflation in oil prices people will take it in stride.

Very clearly deregulation is called for. Other subsidies also should be looked into and minimized and they should be well directed. Subsidies should only go to people who are really well below the poverty line.

Q: Do you think the government has been very proactive on the foreign direct investment (FDI) at least?

A: Yes, the announcements have been good in defense. The insurance thing which will need a bill should be done as soon as possible and they should try and persuade the other party. They don't have a majority in the Rajya Sabha and should try and persuade other parties to vote in favour.

I would even go to the extent that if they should introduce the bill and if it fails in the Rajya Sabha they can call a joint sitting of Parliament and get it passed.

Q: Since you head a big real estate company, yesterday we had the order from Competition Commission of India (CCI) on DLF, from industry point of view do you think that was fair and what would your response be?

A: I haven't gone into the details of the DLF case. I don't know what kind of position the company had in the market. So I don't think I will be able to comment but I have heard some people commenting that when builders are delayed and when handing over a flat to a consumer is delayed there are no penalties.

Well, if a builder has delayed intentionally by not investing in time then a penalty to the consumer might be in order. But if a builder has delayed because of government permission delay then there should not be penalties on the builder, but it is a complicated issue and it needs careful analysis.