New govt must focus on job creation, says Ficci President Sidharth Birla

With Lok Sabha election dates announced, the countdown to the formation of a new government at the Centre has begun. Sidharth Birla, President, Federation of Indian Chambers of Commerce and Industry (Ficci) tells Manu Kaushik what he believes the new government needs to do. Edited excerpts:

Q. How do you read the current political situation?

A. The way politics pans out will depend on the people of this country. We should look at people who want to bring about development. Development is not just about business, it cuts across the lives of people whether you build roads, give water or improve health care. The most critical thing is job creation. It could be in the formal or the informal sector.

Whether it is party A or party B or party C or a combination of these parties (that forms the next government) I think the real thing to watch out for is what does the country votes for. We have had a long period of fractured mandates. Either we are looking at national parties or a lot of regional parties. One national party is talking development as its core agenda, the other talks about inclusive growth. At the end of the day, you can not have inclusion without growth. I don't think anybody is talking anything that is not inclusive.

The key point is even the regional parties are running helter-skelter to bring business to their states. Nobody is trying to convert their states into welfare state. Given that, most of the leaders do stand for development. Now with what intensity they take development forward depends on what kind of polity is thrown up by the electorate.

Q. What is the economic agenda of Ficci?

A. If one has to take a single fundamental step, it has to be job creation. It sounds really big, but people must get jobs. We say that the creation of an environment which creates more businesses and allows businesses to grow (is crucial).

I think we would like to see any government which comes to power taking both short-term and long-term measures. I think the short-term hits are the ones which will start generating confidence. Some of these short-term are going to be hard; some are going to be soft.

One area where everybody has been hit badly is inflation. Inflation has caused problems on the monetary policy side. But let us also look at how it affects everybody - corporate houses and the average man. The net income of people has gone down. The propensity to save and invest has gone down. In an inflationary environment where you don't see growth, your propensity to invest as a corporate house becomes low.

Today, inflation is driven by two channels: inflation on the domestic front which is driven by food inflation, and international prices. As far as we can see, pricing power has gone out of the hands of the companies. In a depressed economy, companies don't really increase prices. There are certain things which can be tackled. For example, we keep seeing unnatural movement in food prices. Onion prices moves in multiples and not in percentages. It tells you that something is wrong in the system. Some part of the system is making undue gains.

It is in the hands of the government to address the food inflation issue, whether they attack the APMC (agricultural produce marketing committee) mechanism or pay a lot of attention to how food is collected and distributed. Our stand is that APMC Act should be abolished.

We also need to give positive signals about the implementation of GST (goods and services tax). GST will not happen tomorrow morning because there's still some work that needs to go into it. I don't think there's an idealistic mindset against GST. We saw Arun Jaitley coming on TV and he says that they don't have political opposition to GST. I think there's a breakdown of trust.

Ultimately, we need to put people (concerned) in a room and say that we have to resolve this in seven days. I think government can give a huge signal to clear the way for this positive reform that's been stuck.

Another issue is the food security bill. It's been passed by Parliament and every party has supported it. Let us now do the best we can in the current situation - see how we can look after food production, how do we can look after food distribution and how we make sure that the channels that are set up to implement the food security act do not become leaky holes.

Q. What kind of short-term solutions do you suggest for the next government?

A. Take the example of coal blocks. We don't have sufficient coal in the country and whatever little coal we want, we are importing and that's adding to our import bill. According to me, that's a completely avoidable import bill. It cannot be done away with in one day. I think India has lost out on multiple grounds. Everyone in the world knows that India has coal and they all know that we are not able to mine it. So when India went to the world market, coal prices shot up.

We started importing coal last year, we imported this year. It is conceivable that we will continue to import for the next two years. Are we saying that we are so immensely rich that we can dump billions of dollars into buying coal? The country could put that money to much better use.

How can we move into mission mode to mine more of our own coal? I am saying that there can be an emergency plan drawn up.

The reality is that there is Rs 2 lakh crore are (invested) on the ground. As a country, we can't afford to waste Rs 2 lakh crore. I am saying that the first entity which needs justice is the country. The law will take its own course but I think the government should be in a position to prepare an emergency plan to solve this issue.

Another issue could be increasing the farm productivity. We can look at what are problems in setting up value chains for farm produce distribution, on a very urgent footing.

Q. What are your projections about economic growth?

A. We envisaged some scenarios two to three months back before this number slipped below five per cent. We were assuming about five per cent for the current year. Now, it's 4.9 per cent. We were saying that (growth would be) anywhere between 5.5 and 6 per cent or even slightly higher than 6 per cent in the coming 12 months, assuming that nothing seriously negative happens.

Anything less than eight per cent is not good for this country because of the kind of job creation that is required. At the end of the day, if there's no growth, there will be no governmental revenues. Now, when we will eight per cent? Our thinking is by 2016/17 which somehow got reflected in (Finance Minister) Chidambaram's address recently. Looking three years down the line is wishful thinking.