MCCIA Director General Anant Sardeshmukh feels there is need for consensus,quick decision and implementation of policies
What do you think is the cause of current slowdown in economy?
The causes of the current slowdown are many. Primarily,there is tremendous uncertainty on all fronts,be it economic,political,domestic or international. In such times,not only businessmen,but also the common man would like to defer decisions. The rising prices of production inputs and commodities in the global market coupled with the depreciating rupee are affecting the margins of companies. We are not that dependent on global demand,its the drop in domestic demand that is the main cause of concern. Making the situation difficult is the governments apathy towards the general demands of the trade,business and industry. Lack of action on the reforms front is also a major contributor for the economic situation. When we are in need of foreign investment to tackle the issue of balance of payment,we have sent wrong signals to the foreign investors. Absence of stable long term policies is also deterring investors. The delays in necessary financial reforms,infrastructural development,government delays in sanctions and approvals,prolonged regime of high interest rates have also contributed to the slowdown.
Which sectors have been hit the hardest in the city?
Sectors such as automobile,capital goods,general engineering and infrastructure are bearing the brunt of adverse conditions. The impact on the automobile industry will have ripple effect on other sectors as a majority of our small and medium enterprises (SMEs) is dependent on it.
Have you asked the government to infuse some confidence by way of policy interventions?
Yes,we have been suggesting certain measures. We are pressing for some reforms which are essential for the industry. Being an industry body,we would be following it up at all times.
How do think the current slowdown will pan out? Do you think it will improve or worsen?
In the current situation,policy reform is necessary. If we accept the challenge to tackle slowdown at the national level and decide to take required action,it can be reversed. Consensus,quick decisions and implementation of policies are required.
The situation would definitely improve as the Indian industry has the necessary acumen and strength. Today,our products and services are recognised globally and there is a demand for them. In the context of changing scenario in China,Indian competitiveness is increasing.
We should have a good monsoon,which will change the economic scene. Besides,the finance portfolio now moving to the Prime Minister,the industry expects several remedial measures.
Do you foresee any job losses in future?
We have a shortage of skilled manpower. It is difficult to get good,skilled manpower and the industry is aware of it. In the current slowdown,businesses are likely to resort to austerity measures. Effective and efficient use of resources is key to effective operations. So redundant resources would be managed carefully. I foresee some job losses.
How big do you think is the role of global factors in the slowdown? What is the role of domestic factors like high interest rates?
The global factors are important in many service industry segments. Service industry itself forms a major section of our economy. At the same time,we have a robust domestic demand; if that is taken care of,we will have no major problem.
The prolonged regime of high interest rates has affected our industry and businesses in termsw of profitability and new investment decisions. Inflation and the high cost of consumer loans have affected demand in almost all segments.
Do you think that there is a need for tax sops at the moment?
Certain fiscal policy changes would help to enhance aggregate demand,thus giving impetus to economic activity. The need of the hour is to increase ecconomic activity. Certain reductions in taxes such as excise though adversely affecting deficit,would for some time help to rejuvenate economic activity. Early implementation of GST and other financial reforms would help in a big way.