2020 has been the worst year in India’s recent history with economic recession, covid crisis and China’s incursion on India’s border, says Mr Sudhir Jalan, Chairman, Neo Foods. He says that even after a rebound in growth next year, India’s GDP could still be 2% lower in March 2022 compared to March 2020, signifying a loss of two years for the country.
“Something dramatic needs to be done to change the mood of the nation,” says T V Mohandas Pai, Chairman, Manipal Global Education Services. He suggests abolishing long-term capital gains for the next five years, reducing tax for the middle class, cutting circle rates to lower house prices, and extending incentives of mobile phone makers to the entire manufacturing sector.
Mr Pramod Bhasin, Founder, Genpact and Chairman, Clix Capital advises giving stimulus money to companies that hire more people and allowing state governments to borrow overseas, as they cannot pay even salaries without the GST money. He also suggests unlocking of value stuck in land, infrastructure and legal disputes.
Mr Harsh Pati Singhania, Vice Chairman & Managing Director, JK Paper Ltd suggests putting money in people’s hands and monetizing deficit, as inflation is low and oil prices are benign. He also recommends an urban MNREGA scheme as large number of jobs are lost in the urban informal economy. “The government has to stretch itself despite the risks and constraints on revenues because taxes will come back only when consumption comes back,” he says.
Mr C K Ranganathan, Chairman and Managing Director, CavinKare Pvt Ltd says that recreating the lost jobs and creating confidence to invest are the keys to economic recovery.
They were speaking at the 47th National Management Convention of All India Management Association (AIMA).
According to Mr Bhasin, the attempt to revive economy by channelling assistance through banks would not work because the banks already have an NPA problem. The credit guarantee schemes too will take time to make an impact, and “by then the patient might die,” he says.
Mr Singhania says that supply is not the issue and the constraint in many businesses is the demand. “Despite the fear that stimulus money may end up as savings, government still has to do it,” he says, adding that the government can monitor the money’s use the in accounts linked to Jan Dhan and other welfare schemes.
Mr Singhania wants the government to promote domestic industry and have free trade only on fair terms. He points out that Indian companies face non-tariff barriers everywhere and India should not shy away from using the same means.
Mr Pai says that the government can borrow overseas to lower its borrowing cost from 7% to 5%, as much of its budget goes into servicing its debt. However, Mr Singhania says that India should be careful in borrowing overseas as any large exposure to foreign debt could create trouble if any sudden unfavourable event occurs.
The CEOs gave up to 2 years to the economy to recover the pre-covid level.