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Industry leaders ask govt to pump prime economy

BS Bureaus

Leading industrialists on Thursday put the onus back on the government, saying an economic revival would need large public investments and availability of cheaper finance.

In meetings with Finance Minister Yashwant Sinha and senior officials from the finance and industry ministries, the chiefs of automobile, cement and construction industry asked for a robust revival of public investment in roads and housing stock.

Thursday's meeting had been called by the finance ministry to discuss with these three sectors the reasons for their slipping performance -as also to urge them to take advantage of the fiscal incentives announced recently to push up their sales.

Speaking later, the finance minister said the government had drafted an action plan to tackle the slowdown in the three key sectors but declined to elaborate. "We have a concrete plan of action," Sinha said. "We will create the necessary conditions for growth."

Sinha said the government could only provide a suitable policy framework and added that it was for the industry to respond. The ministry had called these sectors particularly as they have a strong linkage with the rest of the economy in terms of creating demand.

Auto sector representations included those by Tata group chief Ratan Tata who said automobile makers need cheap finance to compete against the Chinese companies, who offer better payment terms in new markets.

Rahul Bajaj said the automakers have asked the government for more clarity in the definition of CBUs (completely built units). The ministry had hiked the customs duty on CBUs to 70 per cent to protect domestic auto manufacturers.

There was apparently some dispute among the companies on the extent to which customs duty should be scaled down, with the importers of CBUs asking for a lower duty. Bajaj also said that banks should be encouraged to provide auto loans in a big way like the NBFCs. Jagdish Khattar of Maruti Udyog said there should be legislation to scrap all vehicles above a certain age.

Sinha apparently admonished the cement manufacturers for raising prices in the face of a slump in demand.

However, industry representatives countered saying prices have not changed for bulk consumers. Instead, they emphasised on the need to push up demand for cement by sanctioning more projects in areas like canal lining and housing construction. Later in the evening, the construction industry chipped in with demands to change the rental laws to encourage people to buy more houses.

Narottam Seksaria of Gujarat Ambuja Cement said a large dose of investment in concrete roads, housing stock and even irrigation projects would revive demand in the economy, in turn doing the same for cement and construction materials.

Sushil Ansal of Ansal group asked for the setting up of a builders' bank to provide affordable finance for real estate development. He also said the 100 per cent FDI regime should be extended to development of commercial buildings and not just township development.

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