NEW DELHI– Lauding the government for pursuing reforms, new FICCI chief Harshvardhan Neotia lamented that banks were yet to pass on the interest rate cuts to industry while appealing to all political parties to ensure early roll out of the pan-India Goods and Services Tax (GST) regime.
Otherwise, he said, India’s superior macro-economic fundamentals, higher economic growth, declining inflation and the benefit from falling commodity prices have made foreign investors view Indian companies quite favourably.
“The GST can prove to be a game changer,” Neotia told IANS in an interview, emphasising that it was not only the most far-reaching reform in independent India’s tax regime, but also held potential to spur growth and make India a single market.
“We have to improve consumption, which means generating demand. So how do you spur demand? One is moderation of interest rate by making monthly instalment payments more attractive, and thereby, boosting demand.
“The full benefit of the reduction in the policy rates by the Reserve Bank of India hasn’t yet come through. It is one area that FICCI can help articulate concerns of industry,” said the new president of the 89-year old Federation of Indian Chambers of Commerce and Industry.
He said the proposed GST, stalled in the Rajya Sabha for the ruling NDA’s lack of majority in the upper house, will bring more people under the tax net, broaden its base and perhaps lower the effective rate, boosting consumption.
“I feel that the tax buoyancy will increase, compliance will improve and yet there will be some reduction in taxes and the impact of all these would be one to two percentage points rise in GDP,” said the 54-year-old Neotia — who also owns an Indian Super League football team along with former cricketer Sourav Ganguly.
Overall, he said, India’s superior macro-economic fundamentals, higher economic growth, declining inflation and the benefit from falling commodity prices have made foreign investors view Indian companies quite favourably, and has resulted in their premium valuation compared to those from other emerging markets.
“India’s economy is more insulated from a global slowdown being largely driven by domestic consumption,” said Neotia, who is chairman of Ambuja Neotia Group with business interests ranging from real estate, including housing, to hospitality, healthcare and education
Among his priorities as FICCI president, he said was following up on the Paris declaration on climate change talks about which industry is quite enthused.
“It is time for the industry to gear up in tackling the challenge of climate change in a renewed confidence. FICCI will engage in developing a viable mechanism by which green technology can be further encouraged in Indian industry,” he said.
In light of the Justice Lodha panel’s recent report recommending legalising betting in Indian cricket, Neotia said it is always better to have a situation where betting is regulated.
“Betting is there in India, so it is always better to have it brought in the mainstream and regulated,” he said.