India Inc frustrated over govt's failure to revive economy

Corporate leaders say economy going through troubled phase which is raising concern among global investors about investing in India.

A day after Ratan Tata expressed his frustration over the political leadership crisis in India, several other corporate leaders have joined to say they are frustrated over the government’s failure to prop up the economy.

The rupee’s free fall triggered angry reactions, with many saying a falling rupee “without any parachute” and the bickering in the government with the present finance minister blaming his predecessor is not helping matters.  

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“All the growth parameters are looking precarious; there are serious governance issues and rampant corruption prevalent in the country.  There is a lack of vision as part of the country. However, I believe all the 10 points suggested by the finance minister in his Parliament speech yesterday should be worked upon to improve the situation,” says Sanjay Lalbhai, chairman and managing director (CMD) of Arvind Ltd.

Corporate leaders say the economy is going through a troubled phase which is raising concern among global investors about investing in India. 

The rupee fall will just stock inflation hitting the common man hard. A higher inflation will constrain the ability of the RBI to cut interest rates to kick-start the economy.

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“The whole economy will suffer dramatically (with rupee fall)-- there will be huge inflation, which will lead to high interest costs and a whole vicious cycle will be created. I am very surprised that the government and the RBI are not intervening sufficiently to prevent the volatility,” Adi Godrej, Chairman, Godrej Group, said.

Industry says the Manmohan Singh government lost the plot when it sought to tax the Vodafone transaction in spite of a Supreme Court judgement against it and soon after made a series of blunders.

The series of scams in the last four years has further eroded the credibility of the government.

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The government has lost the confidence of the investors and its actions were partly to blame for this, S Gopalakrishnan, executive vice-chairman, Infosys, and president, Confederation of Industry.

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Kiran Mazumdar-Shaw

Kiran Mazumdar-Shaw, CMD, Biocon, said the country was now paying the price of a confused and conflicted coalition that has prevented any meaningful economic reforms.

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The lack of leadership in managing the economy can be seen in the rupee’s movement, with Rahul Bajaj, chairman of Bajaj Auto, saying the rupee fall was just the symptom.

The problem lies in the lack of clear economic policy. “We are paying for the last four years of inaction and absence of reforms. The government has spent a lot of money in loan waivers, NREGA and Food Security Bill and all these populist measures have now added to the deficit. We are not opposing pro-poor moves. We are against populist measures. We should be treating the disease and not the symptom. Now is the time to change policies,” says Bajaj.

With inputs from Bibhu Ranjan Mishra, Vinay Umarji and Praveen Bose