It is almost a year since the BJP-led National Democratic Alliance came to power. The Narendra Modi-led government has done quite well for itself in this time, believes Ajit Gulabchand of HCC.
Gulabchand says the government inherited an economy that was severely impacted by old policies.
"They have tried to tackle many more fundamentals of the whole country that will give stability that we need in order to grow our economy," he said in an interview to CNBC-TV18.
On the focus areas for the government, Gulabchand says scrapping retrospective taxation will send a strong signal to investors abroad that we are ready to do good business here.Below is the verbatim transcript of Ajit Gulabchand’s interview with CNBC-TV18's Latha Venkatesh.
Q: What will be the ticks that you will give the last one year in terms of government policy?
A: The government has done quite well in the whole of the last year. They have tried to tackle many more fundamentals of the whole country that will give stability that we need in order to grow our economy and to that extent the government has done very well on foreign policy which is the first job of any government is to secure the people of India. An excellent change of direction has been made both for the neighbourhood as well as internationally and foreign policy nowadays inexplicably also means a lot more connections for trade and we must not forget that about a year or year and half ago the world was not even bothered to look at India, it had given up on India that it is any possibility. So within a short time of one year to make the world look at you has been an enormous achievement. On the areas of security, both in terms of foreign policy as well as defence huge strides have been made. So there is a certain sense of solidity of India today which we didn’t see before.
Then there are other social issues but they impinge upon some of the economic issues like the ‘Swachh Bharat Abhiyan’, getting more people into the banking system not necessarily giving them free dole but getting them into the banking system. Several of these things have been launched. Then more power to the states, after all we are a union, we are a federal set up. Too much was Delhi centric and these things have been achieved very well in a short time.
Then this most important economic reform that the government has done is that it has done away with the Planning Commission. Now the Planning Commission essentially is a Marxist socialist pillar. It basically was created by them so the state will control the resources of the nation whether it is even where Latha will work or Ajit will work down to where Steel will be used and by doing away with that he has given a signal we are now becoming a free economy. By pushing through the Goods and Services Tax (GST), not that it was not tried by everybody, everybody wanted it, but by pushing through the GST by saying, yes we will get it through we have again created a common market. So you can look at it. On one side they are doing away with the Planning Commission there is more strength to the states and the GST we have acquired a huge foundation for India’s economic growth.
Q: Let me ask you as a businessman are you seeing more tenders for roads and will you bid for them. Do you have the courage to put more money on the table or ask for more loans?
A: Let me tell you something. As far as infrastructure or some of these things are concerned the slowdown was so serious forget all the new GDP growth rate let us go by the old, let us just clear our comprehension, the five or four whatever it had come down to, see that slow down prior to that about four or five years ago the visible order book in the international terms per year at the beginning of the financial year about USD 110-120 dollar for construction. This has dropped to below 15. Now to come back even 50 and 60 is a journey, now this journey we had anticipated it would take them at least since they came into office about 18 months to make. Now looking - the damage done by the old policies were so bad they should probably take not just 18 but another year or so.
Q: So you mean in this one year it has not improved at all?
A: It has improved, but fundamentally improved, less actually in terms of – now order booking, order flows have started substantially in the transport sector and yes, you must understand that there are two sectors, one is the construction and one is the PPP where huge investment is required. Construction is another kind of sector. And yes, we are bidding, we have done very well. In fact about Rs 5,500 crore of L1s are there, we have to convert them into activity but this flow has begun. Did it begin right away, not it took some time and in the last four or five months this movement has begun and this will increasingly move but it will move at a slow pace for at least another year. That is why as a company we have decided that we will have to manage with slow growth or a steady or almost flat top line and yet be able to make a profit. This is what we have decided and once this thing begins we would take the risk of not being prepared enough for quickly scaling up. We have done that in the past and we will do it.
Q: One big thing you want from the Prime Minister this year?
A: I would make it two, first is all the arbitration awards please pay them and if you want to challenge them challenge afterwards. Second thing I would like to see is remove the wretched retrospective act. It gives the single most beautiful signal to the world that we really mean business in a new way, we are making a break from the past and the third is we would like the Reserve Bank of India (RBI) governor to cut the interest rates down at least by three to four percent because then it allows 14 percent IRR investment will start growing.
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