PM Modi asks industry to risk and invest more; promises to improve ease of doing business

New Delhi: Prime Minister Narendra Modi on Tuesday asked the Indian industry to take risk and invest more as his government promised a broad range of steps including stepping up of investment in infrastructure and improving ease of doing business to attract global investment.

A meeting of the industry and business leaders, bankers and economists at Prime Minister's residence brainstormed over how to convert the global turmoil into an opportunity for India.

In a nutshell, the participants felt the global situation, especially the volatility in the capital and currency markets, is a transient phase and that steps should be taken to strengthen the real economy.

Also Read: India's economic fundamentals are reasonably strong: Arun Jaitley

India Inc pitched for an interest rate cut as well as hastening the approval process.

In his concluding remarks at the end of over three-hour meeting, the Prime Minister referred to the global economic situation and urged the captains of industry to take risks.

"Since you regard this as a great opportunity for India, it is for India's private sector also now to increase their own investments.

"Conventionally, compared to others, the private sector has greater risk taking ability because their entrepreneurship emanates out of risk taking," Modi said.



Prime Minister laid thrust on low cost manufacturing and felt the strength of economy lies in its huge human resource, size of domestic market and that it is not entire export dependent.

He suggested that small and medium enterprises sector and using MNERGA funds can become a possible tool for skill development.

The new Mudra Bank can support unorganised sector. Transparency in governance will lead to early decisions, he added.

"What we are looking at is different steps to strengthen the Indian economy," Finance Minister Arun Jaitley told reporters after the meeting called to discuss 'Recent Global Events: Opportunities for India'.

Jaitley said the steps will range from investment in infrastructure, irrigation, easing doing business, attracting more global investment, generating private sector investment in India.

"These are the various steps which we are taking. So in this situation the best option for India is to strengthen our basic parameters... We are concentrating on strengthening the economy as a whole and how to convert it into an opportunity," he said.

Boosting infrastructure spending as well as concentrating on agriculture sector was key to strengthening the domestic economy in the current scenario, he said adding an improvement in the agriculture sector would enhance the purchasing power of a large number of people. Sectors like food processing, textile and tourism were emphasised in this regard.

"Now, they have suggested... Concentrate on the agriculture sector which will have a spillover effect on other sectors because a good agriculture will improve the purchasing power of a large number of people," he said.

Increased expenditure on irrigation, emphasis on food processing, expediting the investment procedure for infrastructure creation were the other suggestions made at the meeting, he said.

Reliance Industries Chairman Mukesh Ambani, Tata Group head Cyrus P Mistry, Aditya Birla Group head Kumar Mangalam Birla, Sunil Bharti Mittal of Bharti Airtel and ITC chief Y C Deveshwar were among the industry leaders who attended the meeting.

RBI Governor Raghuram Rajan, ICICI Bank CEO Chanda Kochhar and SBI Chairman Arundhati Bhattacharya and economists like Subir Gokaran and Chief Economic Advisor Arvind Subramanian as well as Niti Aayog vice chairman Arvind Panagriya were also present.

On the industry's demand for an interest rate cut, the Finance Minister said it was the domain of the Reserve Bank to set monetary policy.

"There was no discussion on timeframe or any such thing. Neither did the Governor say this nor was this an opportunity to say this," he said.

The meeting felt that the impact of global events on the Indian economy will be far less because the fundamentals are reasonably strong, Jaitley said adding that therefore they wanted steps in the direction of further strengthening the Indian economy.

The Finance Minister said there were several suggestions with regard to de-stressing stressed sectors particularly steel, textile, power distribution companies and tourism.

The suggestions also included ones on cost of labour, cost of capital, further emphasis on stalled projects and defensive measures in case where there are clear evidence of dumping.

While the participants felt large number of tax matters have been resolved, balance of reforms including passing of GST must be carried out, he said. "They expressed hope that GST which was held up because of parliament obstruction would move forward."

Participants also emphasised on two more legislative steps -- one relating to bankruptcy code and the other relating to definition of corruption under Prevention of Corruption Act, a step which the government has already taken, he said.

Bankruptcy code, he said, was in the final stages of drafting.

In his presentation before the Prime Minister, Subramanian spoke about the key events that were contributing to the global turmoil and what India could do to tap the opportunities and meet the emerging challenges.

He said "India stands out. Whatever projections you are seeing, (India) is the highest growing country among all the major economies and the country would remain a relatively attractive investment destination."

The Prime Minister, Subramanian said, "has clarified that this is not a matter of one country taking advantage of another country's (China) performance which is deteriorating. It's a matter of seeing challenges as opportunities that arise."

Most of the participants, Jaitley said, "felt that we are going through a phase of extreme volatality...Some of them suggested that volatility is the norm at the moment and therefore it is going to result in some turmoil in the market and on the currency front and this situation will continue... it will keep evolving."
Once the global turmoil gets over, issues would come up but at the moment India is one of the lesser impacted economies in the world as the nation's fundamentals were strong, he added.

Declining prices of oil and commodities in the global market is an opportunity for the country as it is a net importer, Jaitley said, adding in this backdrop several participants suggested that steps should be taken to further strengthen Indian economy and improve ease of doing business.

"By and large major thrust of entire discussion was that since in terms of its economy India is relatively untouched or little touched by these events except the transient impact on market, it's an opportunity that India must avail of in terms of further strengthening its own domestic economy so that larger benefits of this global situation...Can come India's way," he said.