India needs to focus on ease of doing business, consistent tax policy and lower cost of capital to achieve a sustained growth rate of over eight per cent in the long term, said newly elected FICCI President Sanjiv Mehta on Monday.
He also underlined the need for constant efforts to boost private investment for high economic growth over a long period of time. Mehta took over as president of the Federation of Indian Chambers of Commerce and Industry (FICCI) earlier this month. “We need to maintain over eight per cent of growth on a sustained basis which will be a challenge. The current year is expected to achieve over nine per cent economic growth as several sectors have already reached the pre-COVID-19 levels,” Mehta said in an interaction.
India, he said, will be close to a USD 3-trillion economy at the end of the current fiscal, and “we need long-term growth on a high base”. The Reserve Bank of India has projected the GDP growth at 9.5 per cent for the current fiscal ending March 2022. He further said there are positive signs in the economy as tax collections are moving up, and exports are also nearing USD 400 billion. Foreign direct investment (FDI) is also going up, which is a positive sign for the economy, he added.
Mehta, however, added that the private investment is yet to pick up, and as such, the government needs to keep spending money to prop up the economy. The president of the industry body also underlined the need for reducing the cost of capital, which, according to him, was high when compared with interest rates in the competing nations. On the possibility of Omicron impacting the economic activities, Mehta said the spread of the new coronavirus variant is a matter of concern, and the only way to fight is through rapid vaccination.
The government, he said, should further accelerate the vaccination drive. As regard booster doses, he added it could be considered based on the advice of experts. Referring to his meeting with Prime Minister Narendra Modi on Monday, the FICCI president said that during the interaction, he made a case for accelerating R&D (research and development) activities with a special focus on biotechnology, greentech and digitech. “We need hubs of excellence in R&D to become a world leader. Indians should file more patents,” he said, regretting that the number of Indians filing patents is low compared to those in China and the US.
According to him, the government should also increase focus more on MSME (micro, small and medium enterprises) and agriculture sectors. While the MSME sector is a large employer, agriculture will bring in more prosperity in rural India, he added. When asked if there is a case for the RBI to further lower the interest rate, Mehta said the central bank has to do a balancing act and expressed hope that it will take a call appropriately. Mehta is chairman and managing director of Hindustan Unilever Ltd, president of Unilever South Asia and member of Unilever Leadership Executive.
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