Perception of India improved in last 6 months: Godrej

Reduction in interest rates, moderate taxes, introduction of Goods & Services Tax and reforms hold the key to India's growth, says Confederation of Indian Industry Chairman Adi Godrej in an interview with Vrishti Beniwal. Excerpts:

After the industrial output numbers were released this month, Finance Minister said green-shoots are visible. Do you agree?

Some green-shoots are visible and IIP numbers are one of them though base effect has to be taken into account. Other is the perception. For many quarters there were no reforms. Some of the reforms which don't need Parliamentary approval are already in place.

It appears other reforms will also be implemented soon. Formation of the Cabinet Committee on Investment is very positive news. Most importantly, if the GST is introduced growth will be good in 2013-14.

Do you expect the Cabinet Committee on Investment to deliver on expectations or it would be just another committee?

In principal it should help a lot. It is a question of how it is implemented. The committee has been formed under the chairmanship of the Prime Minister and I presume fast-tracking of large projects will be possible.

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Industry had said India's image took a beating because of Budget announcements with regard to General Anti Avoidance Rules (GAAR) and retrospective taxation. Has the perception changed in the last few months?

India was doing very well till February and then the Budget created an extremely negative sentiment. GAAR and retrospective taxation created very bad perception even outside India. Now the Shome panel has given excellent recommendations and I hope they are implemented soon.

If the economy grows well revenues will rise considerably. The new team in the finance ministry is fully aware of that and I hope sensible policies will be taken forward.

Finance Minister has cautioned we will have to take a bitter pill to restore health of the economy. What kind of steps you envisage?

One of the bitter pills may be that you can't keep subsidising lot of products like petroleum and fertiliser for a long period of time. I don't think in these circumstances it would be good if rates of taxes are raised.

It may have a negative impact on GDP growth as well as collections. We have also strongly suggested to the RBI that interest rates need to be reduced.

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The industry is not happy with the Land Acquisition Bill in the form it has been approved by the Cabinet. What are your concerns?

The provision that unless 80 per cent of the owners of a land to be acquired agree the acquirer won't go ahead is too high a number.

We suggested if 60 per cent agree then others' land should also be acquired at the same price. Some provisions they have corrected. If there are some issues we will take it up for amendment when the Bill is discussed in Parliament.

What additional steps should be taken to bring back the economy on growth path while containing the fiscal deficit?

It should be reforms plus some administrative steps. Projects should be cleared fast and that will help new investment. Interest rates should be moderate. Most important is GST because that will add to GDP growth.

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The government has often sought industry's help in convincing BJP and state governments to support GST.

We have done it. CII has gone and met many of the chief ministers. I have met Narendra Modi. Fortunately he has changed his mind now. We met Bihar Chief Minister and Opposition leaders. I think there is a better understanding between the government and the Opposition now on GST.

What are your views on Direct Taxes Code which has undergone many changes and may be reworked again?

It is a good reform and should be passed. The original DTC Bill had few flaws but it had some very good points also. Now while the flaws have been removed, which was mainly the Minimum Alternate Tax on assets, some other provisions have also been diluted. It's better to have this DTC then nothing but that's not the idea.

What are your expectations from the Budget?

It should be pro-growth, create positive perception and sentiments. Perception today of India is better than what it was six months ago.