There has been a definite improvement in the growth performance of the economy over the last one year and green shoots of recovery are visible, Harshavardhan Neotia, new elected President, FICCI told Prashant Mukherjee in an interview. He also expects the economy to grow more than 7.5 per cent. Excerpts:
How much GDP growth do you expect in 2016-17?
In the current financial year, we expect the economy to clock a growth of around 7.5%. The government over the last 18 months cleared slew of large projects that were stalled. We are hopeful that GDP growth in the next fiscal will be around 8%.
Do you think Indian economy has completely come out of the slowdown phase?
There has been a definite improvement in the growth performance of the economy over the last one year and green shoots of recovery are visible. A good part of this growth is led by public investments. While these are encouraging signs, there is a need to get the private sector investment cycle moving again. Even today there are several segments of industry that are saddled with excess capacity and hence there is hesitation to commit to new investments.
Do you have any suggestions for Finance Minister for Budget 2016-17?
At the macro level, there are four areas where we would like to draw the government’s attention. First, we would like the government to outline the roadmap for phasing out of exemptions, lowering of corporate tax rates and minimisation of subsidies. Second, there is a need to move forward with the disinvestment process with greater vigour. Third, government should consider reducing its equity holding in public sector banks upto 26% even as it retains control by way of a golden share. Fourth, filing of returns above a certain threshold level of income irrespective of its source should be considered.
Do you think there is further need for interest rate cuts?
Given the current state of the economy, I think there is a need for further loosening of the monetary policy to support the incipient recovery. More importantly, and as mentioned earlier, there is a need for banks to effectively transmit the rate cuts in the form of lower lending rates.
What is your take on the ambitious GST Bill?
Industry looks forward to an ideal GST but given the constraints of a federal polity, it would even welcome a good but slightly delayed GST. On the rate of GST, it is satisfying to note that the committee chaired by the Chief Economic Adviser has suggested a standard rate of 17% to 18%.
What is your take on the ongoing debate over net neutrality and free basics? What are you in favour of?
The subject of Net Neutrality is currently under debate. Various countries have adopted different models. In the context of India, the government should look at all pros and cons and balance the interests of all stakeholders, providing a level playing field to all.