September 14, 2015 12:00:22 am
In the din of Wednesday’s announcements on the Bihar poll schedule and the Union cabinet decisions, many missed a small news item. The director general of safeguards in the finance ministry recommended a 20 per cent safeguard duty on a common variety of hot rolled coils. Just the previous day, top industrialists, including Kumar Mangalam Birla, Cyrus Mistry and Mukesh Ambani, had sensitised Prime Minister Narendra Modi on the adverse impact Chinese imports had on the domestic industry. They pointed out that India takes 15 months to act on complaints of dumping while other countries take just 45-60 days. Not amused, the PM, who otherwise hardly intervened when the CEOs spoke, asked Economic Affairs Secretary Shaktikanta Das, who was revenue secretary till a few days ago, to explain the delay and pushed for quick action. It’s not that the directorate general of safeguards was not alive to the issue. The industry had made representations to it. But it took the PM to force file movement in the set-up.
Those present at the meeting know what prompted such quick follow-up. This was the first meeting of its kind that the PM has had with industrialists, bankers and economists/ analysts since he took charge last May. Convened at short notice of 10 days, the primary objective was to understand from a diverse group of stakeholders if opportunities existed for India during these times of global turmoil, particularly with China slowing and its financial markets turbulent. SBI chairperson Arundhati Bhattacharya was among the first to speak about stressed assets and the need for protection. Former RBI deputy governor Subir Gokarn took the lead from her and emphasised the need for a strategy to exploit safeguards available under the WTO framework during times like these, when cheaper imports due to suppressed global demand affect India’s trade adversely.
With just three minutes to speak, every invitee had his talking points ready. For instance, Y.C. Deveshwar of ITC spoke about how multinational companies in the food-processing sector could make royalty payments to their parents with just a 10 per cent withholding tax. He was pitching for tax incentives for domestic food-processing companies like ITC to create local brands for different consumer segments. Ambani spoke for the textile and garment sector. Dilip Shanghvi talked, among other things, about how MGNREGA funds could be used for skill
development. A good suggestion perhaps, but not really relevant to the subject of the meeting. Some others spoke about the GST, land acquisition, etc. The ad hoc meeting eventually resulted in a laundry list of items being discussed. To get the biggest bang for buck, industrialists focused on the problems their particular sectors faced, at times unrelated to the subject of the meeting — not everyday does one get an opportunity to interact with the PM.
But at least Modi got to know firsthand the problems faced by industry leaders.
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Each PM has his own way of getting inputs from the ground. It was Atal Bihari Vajpayee who institutionalised it by setting up a Council on Trade and Industry and an Economic Advisory Council, which met at periodic intervals. Both were chaired by him. Manmohan Singh continued with the practice, but the Economic Advisory Council was chaired by C. Rangarajan. In fact, under Rangarajan, who was RBI governor when Manmohan Singh was finance minister in the 1990s, the Economic Advisory Council was a sounding board for the PM. It was tasked with looking into many tricky issues of political significance. Manmohan Singh had also set up an Investment Commission to give government suggestions on how to attract investment in different sectors. Modi has, so far, not established any such structured framework to interact with industry. After he became PM, he has met a large number of foreign CEOs, but has mostly refrained from meeting Indian industrialists one-on-one. Maybe he knows their demands and issues, maybe he doesn’t want to be seen to be pro-corporation, or maybe his office gets inputs from them as and when required.
But the corporate sector certainly believes the PM doesn’t take criticism in his stride. In an interview to PTI in February, HDFC’s Deepak Parekh had said that patience was wearing thin and nothing much had changed under the Modi government. This prompted a massive reaction and a cabinet minister actually told a premier industry chamber to counter Parekh’s views. But, earlier too, Parekh had not shied away from speaking his mind. Along with several other corporate leaders, he had written at least two open letters to Manmohan Singh on, among other things, galloping corruption and the governance deficit that needed urgent attention. Then, in an interview to NDTV in August, Rahul Bajaj said that the Modi government’s sheen was wearing off. He was speaking in the context of the black money law being seen by many as draconian, with great power in the hands of the taxman to harass. Surely, Bajaj has been here for long and doesn’t mind calling a spade a spade. At Tuesday’s interaction, one invitee mustered the courage to tell the PM that his government will be effective only if it thinks it has just five years to deliver. The speaker implied that this was perhaps not the case. Modi did not respond, but maybe he will ponder over it. But were the same sentiments conveyed in public, it could have influenced the day’s discourse.
Postscript: An eerie minute-long silence engulfed the meeting hall at 7 Race Course Road when the PM stepped out of the seating arrangement after two-and-a-half hours of listening, interacting with and addressing the invitees.
Nobody walked up to him. It was only after Modi called out to “Mukesh” that others shed their inhibition and gathered around him. Modi should bridge this distance. Periodic interaction with industry will help reduce friction.
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