‘Strategic sale the better disinvestment option’

While he lauded the numerous steps taken by the government to push growth, he also noted that the government must opt for strategic sale rather than disinvestment through stake sale to the public.

“I think that strategic sale will give the government better revenue than from mere dilution of shareholding,” he said, adding it can move in the direction of giving management in the hands of experienced corporate to give a bigger push to the growth of that organisation.

Shriram said the corporate sector had already started making investment plans. “Many companies are putting money on the ground. My own company CII plans to invest Rs 700 crore in the coming years,” he said.

India Inc, however, was keen on an interest rate cut to push the demand side of the economy and high growth rates. “Considering that inflation, which was a major concern in the past and taking the latest numbers into account, we should go in for a rate cut. The economy can grow faster in a lower interest rate regime and will be good for both investment and demand creation,” Shriram said.

A rate cut, according to him, will make a huge difference to the small and medium sized companies on the investment front, and push up demand on the consumption side, giving the entire economy a boost. “The GDP can hit 8-9 per cent in the next three to four years,” he added.

Other than interest rates, Shriram said that the benefits of the fall in crude oil prices will also prop up the demand as the prices of end products will eventually come down.

“Consumption will go up as a result of prices of products going down following the drop in oil prices in a cascading effect,” he said.
Shriram said the government’s decisions on foreign direct investment in railways, diesel decontrol and winding up of the Planning Commission were big bang reforms.

Implementation of the Goods and Services Tax and moves to improve ease of doing business in India will bring significant benefit to the economy, he said. “It is unfair to expect the government to address all things in a short span of time,” he added.

Shriram said that from the forthcoming Budget he would expect predictability of policies and transparency in taxation systems along with steps that further improve India’s ranking on world bank’s ease of doing business as it will bring in investments. He said that GST implementation alone can take GDP growth up by 1.5 to 2 per cent.

While the government has embarked on the disinvestment programme to meet its revenue target for the year 2014-15, Shriram said that the industry body has proposed to the government that it should not be in too many businesses and look at running businesses differently.