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We will aim for 7% GDP growth, says new CII chief

Sanjiv Goenka, addressing his first press conference after taking over as the new CII president, said that the Confederation of Indian Industry would actively push for a 6.6 per cent GDP growth for the year 2001-02.

"If we can get to a 6.6 per cent to 7 per cent growth for 2001-02, India will be among the two highest growing countries, along with China, thereby setting the stage for 7 per cent plus growth thereafter," he added.

He, however, warned that this was possible only if there was a realisation that India needs much more reforms, there is focus on infrastructure, hurdles are cleared, a slew of policy initiatives are taken, and efforts are made to clean the capital markets and privatisation are pursued vigorously.

Business as usual attitude, Goenka elaborated would result in policy changes not going through, infrastructure continuing to be neglected, privatisation taking a back seat, demand remaining low and investments getting affected.

Goenka was accompanied by Ashok Soota, the newly elected vice-president of CII.

Outlining the circumstances in which he has taken over the reigns of CII, Goenka stated that the global outlook was grim with stock markets world over taking a beating. Every global indicator suggests that stock markets won't recover very soon, the US and EU will post significantly lower growth for the next four quarters, Japan will continue to remain in a recession mode, he said.

This implies pressure on consumer spending, postponing of corporate expenditure, lower demand for investments and capital expenditure, greater competition and much more severe pressure on margins, he added.

Under these circumstances, the CII's theme for the year would be 'Driving growth through competitiveness and infrastructure', he said.

"In an increasingly globalised world, the Indian industry would not be left untouched. The year 2001-02 will see greatest competitive challenges of the last eleven years, margins will reduce and we will see radical corporate restructuring across all industries," he added.

Elaborating on how could Indian industry react to these challenges, Goenka stated that there had to be a ruthless, national drive for greater competitiveness.

In order to pursue a competitive sustainable growth rate, Goenka outlined a five-pronged action plan of CII for 2001-02 namely:

1. Increasing competitiveness
2. Infrastructure and regulatory reform
3. Focus on bank and capital markets
4. Governance, privatisation and labour
5. Learning to play the WTO game

Elaborating on the focus areas, Goenka stated that CII's initiatives for 2001-02 would focus on aspects that are internal to companies, and those that concern the external world and policy changes.

On the internal front, Goenka pointed out that CII would strengthen its already strong corporate advisory services. These involve saving energy costs, TPM, TQM, lean production, QS 9000, greening the supply chain, environment audits, and waste minimisation, he added.

Elaborating the other services, he added that it would also involve various corporate advisory services on cost structures, inventory and supply chain management, improving Economic Value Added, greater corporate governance, better board of directors, investor relations and annual report services.

He pointed out that on the external front, CII would focus on detailed firm-level studies on competitiveness to get a clear quantitative fix on barriers, and thereby setting the stage for policy reforms.

In addition, CII would also do a competitiveness ranking of states; suggest administrative and legal reforms to foster greater competition; and suggest direct and indirect tax reforms to remove impediments to competition.

Goenka also stressed that growth depended upon infrastructure - not only greater spend on infrastructure, but also greater efficiency in implementing infrastructure projects. Therefore CII will focus on infrastructure and regulatory reforms, he added.

Some of the new CII initiatives, outlined by Goenka in his presentation, towards driving infrastructure development for 2001-02 include:

• Public Watch: CII will identify six national infrastructure projects, publicly track their progress and report this every quarter in the national press. The objective is to institute a system of accountability in implementation of infrastructure projects.
• Railways: Indian Railways desperately needs to be restructured. CII will create public awareness of the perilous state of our railways, and communicate why Indian Railways needs to reform as quickly as possible.
• Telecom: CII will help develop the roadmap for convergence and a composite license regime.
• Power: Policy recommendations on power sector reform involve: a CII-McKinsey study on power sector reforms, a CII-Arthur Andersen study on best practices world-wide in power sector, helping adoption of the Electricity Bill, and bringing competition in power through innovative 'win-win' public-private partnerships.
• Civil Aviation: Work towards a liberal-sky policy and the rapid upgrading and privatisation of airports.

On the regulatory aspects, the CII president said that CII will work with the World Bank and IFC to produce a study and conduct a series of workshops/road shows on best international regulatory practices for power, telecom, ports, roads and water.

CII will also conduct an internal analysis of well functioning regulatory authorities to ascertain the skills that are needed to run an efficient regulatory authority, and also examine regulatory capture by government, private sector and bureaucracy, he added.

Emphasising that financial infrastructure was no less important, Goenka outlined the following area on which CII would focus on:

• National Task Force on Capital Markets: It will review problems and loopholes in stock and securities markets, examine quality of regulation in the Securities and Exchange Board of India, and suggest reforms to bring transparency and investor confidence. Report will be prepared in two months.
• Study on Debt Markets: On widening and deepening debt markets in India.
• CII-NYSE conference on capital market reforms:
• Banking reforms and privatisation: Policy paper on reforms in banking and banking laws and procedures to create greater competitiveness and reduce interests.
• Pension reforms: Report on reforming the current pension system to reduce pension liabilities and generate safer but greater return to pensioners.
• Troubled debt restructuring: Conference on international bankruptcy procedures, and methods of restructuring financially distressed companies.

"Competitiveness requires us to learn to play the WTO game. Too few Indian companies know the opportunities and threats of the WTO regime and CII is the strongest industry and business association in WTO expertise. We will continue to play an active role in this area," he added.

He outlined the following areas on which CII would focus on:

• Industry's position paper for the Fourth Ministerial to be held at Qatar in November 2001.
• Engage in sustained dialogue on WTO issues with industry, government, international counterparts, foreign governments and civil society.
• Creating awareness through CII publications on WTO issues.
• WTO impact analysis for various industry sectors.
• Focus on specific trading countries such as China.

Goenka stated that competition, growth and infrastructure also depended on quality of governance and public sector reforms.

CII would be focussing on making a case for significantly higher salaries for ministers, MPs and MLAs - to attract better people in the political profession, and to reduce the temptation of corruption.

CII has also suggested that any donations to political parties by corporates should be by cheque and the contributions should be eligible for 100 per cent tax exemption, he added.

Goenka stressed on the need to create greater public awareness for the urgent need for privatisation of public sector units, continue dialogue on reforms and governance with a larger group of politicians and prepare a policy paper on a new restructuring fund for taking forward PSU reforms.

CII will also examine ways of setting up a fund from the unused value of excess PSE land to finance VRS, workers retraining, unemployment insurance and public sector restructuring, he added.

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