‘Disinvestment option for all sectors’

CII strongly feels there is absolutely no reason for government to be in business. In the past, government businesses funded social programmes and development. From time to time, it strengthened the fiscal situation, but the need for disinvestment in certain areas grew. From this arise issues of corporate accountability and over-all development.

There are sound reasons worldwide that support disinvestment — including the need to free massive public resources tied up in unproductive activities or zero activity. Over time, these reasons will prevail, regardless of government dispensations.

• Which sectors do you suggest immediate divestment, considering the recent setback in aviation?

Divestment is a definite option for all sectors. If not in full, the best way is for the government to disinvest 49 pc as early as possible, especially in sectors like tourism. The UPA government mix is such that we will probably see some slow movement. But there are good people there too and we need to give them time. The public announcements will eventually become more mature and you’ll see things roll on.

However, we have realised that it is better to be subtle and not create a hue and cry on individual divestment cases — if it is necessary, monopolies and private sector can partner or compete, as is the case in different sectors.

• Why then are foreign investors still wary of India? Can CII help?

We believe it’s basically an image and perception issue. CII will go out and sell India — market all the good things worldwide as part of the India Brand Equity Fund that is partly financed by the finance ministry and supported by our efforts. We will build individual brands through direct interactions in foreign markets, and make the ‘‘Served from India’’ and ‘‘Brand India’’ a stringent branding exercise at CII. There has been less investment than we can get, but we’re hedging our bets on markets. Where China is a natural choice, India is an obvious second, and where China is a non-option, Indian ventures will stand out.

• Where will the economy be headed at the end of your term?

We believe the economy will grow at 7-8 pc this year, but to meet the challenge of this decadal growth — manufacturing, agriculture and services — all three need to move. With agriculture growing at a trend rate of 2.8 pc, services and industry at 8 pc and 7 pc, respectively, we get 7 pc growth. For 8 pc and higher growth, we need to take agriculture to 3.5 pc, and services and industry at 9 pc each. Inflation, savings, per capita GDP, exchange rate and other factors are as important as national GDP in the new dispensation.

• How long do you think this services upswing will last?

There is phenomenal scope in services, not just IT and related services but in health, tourism and other areas. There is both domestic demand in the foreseeable future and international demand, which depends on cost competitiveness and quality of our work. I’m not barring the minor blimps, but the prospects are immense.

• And what immediate issues are clamouring for your attention from an industry perspective? What are the growth areas?

We expect there will be inflationary pressure from the rising steel and fuel prices, but many recent such changes were being held over for several months and were expected, too. On a macro level, inflation is at the maximum that India can probably hold on to right now. We should not allow it to cross 6 pc. There are many positive on India’s side right now.

For instance, while the rest of the world sees the end of the textile quota regime as a threat, it is a huge opportunity for our garment exporters. Half our efforts were wasted on buying these quotas and now we’ll be supplying to the world. Then there are core sectors like steel, which are poised for domestic growth in demand and manufacturing as well as value-addition.