PM Modi asks industry to take risk, invest; India Inc wants rate cut

The three-hour meeting at 7, Race Course Road came in the wake of the rupee dipping to a two-year low and the stock markets tanking sharply. Markets bounced back after the meeting, and the benchmark BSE Sensex closed 424 points upward.

Industry leaders who attended the meeting included Mukesh Ambani of Reliance Industries, Tata Group chief Cyrus P Mistry, Aditya Birla Group’s Kumar Mangalam Birla, Sunil Bharti Mittal of Bharti Airtel and ITC chief Y C Deveshwar.

Watch video: Prime Minister Narendra Modi Meets India Inc: Takeaways

RBI Governor Raghuram Rajan, Finance Minister Arun Jaitley, Road Transport and Highway Minister Nitin Gadkari, Power Minister Piyush Goyal and Oil Minister Dharmendra Pradhan were also present at the meeting which laid thrust on low-cost manufacturing and sectors with potential for massive job creation such as MSMEs.
As 27 corporate chiefs shared the concerns of the industry and the measures the government should take to kick-start growth, “the Prime
Minister said it is for the private sector to increase their investments as they have great risk-taking ability. Jo private sector ka investment hai usme gati laane ki avashyakta hai (private sector investment needs to increase),” Jaitley told reporters after the meeting.

He said participants had concerns on extreme volatility but India will be the least impacted economy due its fundamental strength.

“Most participants said that we are going through extreme volatility, so it is going to result in some turmoil in markets and on the currency front. That situation would continue and keep evolving. It will stabilise and new issues would come up. India would be the least impacted economy for more than one reason. It is an opportunity for us because we are net importers of many commodities, oil being the most important. Fall in oil prices is going to help us,” Jaitley said.

The meeting began with a presentation by Chief Economic Advisor Arvind Subramanian who said that key elements contributing to the current turmoil include anticipation of US Federal Reserve policy, geopolitical events like the US-Iran nuclear deal, shale gas production in the US and China’s slowdown.

The meeting discussed the change in China’s strategy from a manufacturing-led economy to one driven by domestic consumption.

“Cheap oil will help our macro-economic indicators. Chinese slowdown and massive excess capacity in sectors like steel will put pressure. But cost of building infrastructure has come down due to fall in commodity prices. This will boost infrastructure development. India will remain an attractive destination,” Subramanian told reporters. He said investments from companies including Foxconn and Xiaomi, who have pledged investment in India, will act as a hedge against China’s slowdown.

While agreeing that “uncertainty and volatility are the new normal”, industry captains made a case for easing of monetary policy, lifting stalled projects, distressing stressed sectors such as steel, discoms and textiles and further improving doing business in India.

“Prime Minister has said that industry must take risk and increase investments… We must go out and invest. Industry has a role to play,” CII president Sumit Mazumder told reporters.

Meanwhile, several industry leaders pitched for interest rate cut, saying it would help them take risks and scale-up investments.

“Prime Minister said this is an opportunity for us to take advantage and invest… Cost of capital is too high but I don’t know how many people can go ahead to take risk and invest… many of us raised the issue of interest rate,” FICCI president Jyotsna Suri said.