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00:00Hello and welcome to NADV Prophet.
00:11You're watching this special with us.
00:15The Industry Body Confederation of Indian Industry has set out our 14-point agenda for
00:19economic transformation.
00:20We have with us, joining us, Sanjeev Puri, who is the Chairman of ITC and also the President
00:25of the Industry Body CII.
00:27Mr. Puri, thank you very much for joining us on NADV Prophet.
00:32Sir, let me begin with your assessment of the economy at this point in time.
00:36It's a time when the new government has taken charge.
00:39There is an agenda which will be set out in the next month or so when the new budget comes
00:44in.
00:45How do you assess the current economic and macroeconomic situation as we speak?
00:54So I think the Indian economy is very clearly in good shape.
00:59And as I say, the proof of the pudding is in eating it.
01:02So we've seen the GDP numbers for last year, 8.2%, ahead of many estimates that came.
01:09And more so, it is remarkable that we achieved 8.2% when globally the numbers are not very
01:17buoyant.
01:19So all in all, I think we are in very good shape.
01:24The macros are good.
01:25I think the investment climate is good.
01:27Private CAPEX is looking up.
01:30And all this has happened because of a lot of good policy interventions that have happened
01:34for several years.
01:36And we are seeing the impact of this come through.
01:39And the impact of investments in public infrastructure, the digital infrastructure, the physical infrastructure
01:46is tremendous.
01:49Both are improving the competitiveness of the economy, I think, and also the quality
01:54of life for everybody.
01:56Travel has become so much easier.
01:59All that is also, you know, having the multiplier impact of greater connectivity, and therefore
02:04we are also seeing the benefits of that translating into, for example, the mobility and transportation
02:13and the, you know, the tourism industry.
02:17If you look at air travel, you look at rail travel, you look at how the tourism sectors
02:24are doing.
02:25So all these are in positive test.
02:26So many, many, many positives in the economy and overall very good position.
02:30Sir, as an industry leader who has years to the ground, two key things are to watch out
02:37for the entire industry.
02:39One is the rainfall, and the second one is the inflation trajectory.
02:43And with the inflation trajectory is also linked the interest rate cycle which is there.
02:47How do you assess these two macroeconomic, you know, variables which are there as per
02:52you because that's something which would be, you know, driving consumption and growth going
02:58forward?
02:59No, they are very, very valid points.
03:05So what we understand from the forecast available, the monsoons are going to be better.
03:12And therefore, we believe that the agri-sector should perform better this year.
03:17And we've also seen when the agri-sector performs better, the food inflation is more, is moderated.
03:24In fact, you know that in CPI, the core CPI is at around 3%.
03:28What is a little sticky still is the food inflation.
03:31And that we believe could moderate because of the, because of better the monsoons.
03:37And the CII's own expectation is inflation around 4.5%.
03:43And with that, we believe that in the second half of the year, we could start seeing easing
03:46of interest rates.
03:48So all in all, this will be positive for the economy.
03:52Sir, let me come to the 14-point agenda that you have recommended.
03:58The top on that is the global value chain which you spoke about.
04:03Can you take us through what exactly are the policies that you're looking forward as far
04:07as, you know, the global value chain that we are trying to create?
04:16So you know, there are many transitions happening in the world.
04:21So two important ones are supply chain diversification and energy transition.
04:29And these are areas where India has tremendous opportunity to participate in.
04:35Seventy percent of the global trade is through global value chains.
04:40And the idea is to, because the supply chain diversification is being thought about and
04:46because energy transition is creating new impetus.
04:50So both of these are opportunities for us to participate in global value chains.
04:55And what is it that is required to do that?
04:59Very clearly, I would say, let me start by saying that a fair bit has already happened.
05:05But there are the next steps that need to be taken to improve the competitiveness of
05:09the economy.
05:11Some of these are to do with certain factor reforms in the economy with land, labor, you
05:17know, agriculture, power, and so on and so forth.
05:20It is also the journey on, you know, cost of ease of doing business where, you know,
05:25tremendous progress has been made in the past.
05:28So of course, there are newer areas that can be addressed.
05:31So that journey should continue.
05:33FTAs is important for integrating into global value chains.
05:39And we've made some progress in the past.
05:42And there are some FTAs that are under discussion.
05:45So industry would welcome these being signed as soon as possible.
05:49I think one area that is also important for global value chains is the aspect of sustainability
05:54and energy transition.
05:56So that's the area that it's important that there are sectoral roadmaps and also cognize
06:03for the social aspects of the transition.
06:07And the funding, you know, it requires a lot of funds.
06:10So access to green funds is another important area that needs to be looked at.
06:18And you know, funds have to come from public, private, multilateral institutions.
06:23So to unlock private capital, I think the right incentives and disincentives in the
06:27form of carbon markets, which is also underway, are extremely useful.
06:32I also believe that there are some progressive policies that have been announced by the center
06:37like the open access policy.
06:39But, you know, in certain – in the last mile in some states, there are challenges.
06:44So removing the friction at the last mile will also create economic viability and therefore
06:49there will be an unlock.
06:51There are certain areas where technology has to be – technology is nascent or being developed.
06:56So once these are developed and become economically viable, I think private capital will go there.
07:02And I think I'd like to compliment the government for being very proactive in setting up, you
07:07know, the missions behind creating these solutions.
07:13So these are some of the very important areas.
07:16And of course, I think we must also look at the rural sector in particular.
07:24That's an area where we would recommend that the private capex also is scaled up.
07:31Sir, a couple of things here.
07:34One, you spoke of a rural sector.
07:37We saw some signs of rural distress in the last couple of quarters.
07:43As a company and as an industry leader which – who has a very large exposure to agri-side,
07:50how do you see this current, you know, state of the rural consumption?
07:56And are you seeing some kind of, you know, reversal of that status quo which was there
08:01for last couple of quarters and, you know, consumption coming back in some way?
08:10We are – you know, from the commentary that's come from various companies after
08:14the end of the last quarter results, there are reports of green shoots of consumption
08:20increasing.
08:21There are certainly reports of that.
08:25And given the favorable conditions of monsoon and therefore inflation and interest rate,
08:29we do believe that consumption will improve further.
08:33I think the impact of all the reforms, public capex, and the fact that we are saying that,
08:38you know, there could be a greater accent towards rural in public capex.
08:43So that will provide impetus to the – further impetus to the rural economy.
08:48In addition to that, I think the investments in agriculture and there are some interesting
08:52pieces that are already embedded in the vote on accounts on the integrated approach to
08:58certain sections of the, you know, the agriculture, the focus on FPOs, digitalization and technology
09:06that will provide boost to the agriculture areas and farm incomes.
09:11And the third aspect is also the facet of empowering, you know, particularly rural youth
09:19with the right skills, education, right healthcare facilities so that they can also partake in
09:25the opportunities that are there in the economy and develop the right kind of skills which
09:30the industry also requires for growth and scale up.
09:35So these are essentially the, I mean, essentially what I am saying is that we are expecting
09:40it to improve and we can provide further impetus to it on with some of these areas that I have
09:46spoken about.
09:47As part of your recommendation, you have also suggested a couple of institutional reforms,
09:53you know, land being one of them.
09:55There is a lot of, some of the states have been proactive in undertaking that.
10:00But what exactly are you trying to get because land is being a state subject and not a center
10:06subject and so, you know, it requires some bit of push or nudge from the center to undertake
10:11those kind of reforms.
10:14You are suggesting, if I am not wrong, you know, reduction in stamp duty on land and
10:19maybe an online integrated land authority.
10:22How does that work for the industry and for the growth?
10:28So, you know, once the factor costs get optimized, so it naturally makes the industry more competitive
10:40and with online records and the guaranteed titling system that we have recommended, it
10:45also brings in efficiency and speed of procuring land when the investment is to be done.
10:51Okay.
10:52So, it reduces cost of doing business and also ease of doing business.
10:57And you think most of the states would be on board with this kind of thing because there
11:02has been an attempt to, you know, digitize land records and titling for the last couple
11:08of years.
11:10Many states have been able to do partially but not been able to do, not been able to
11:14completely, you know, get it done.
11:18But do you think that there can be a pace attached to this kind of reform?
11:23Yeah, we would expect that this would be, you know, be followed through.
11:34And the reason that, that is in fact exactly the reason why we are suggesting an institutional
11:40mechanism which is focused on this activity to provide impetus to it.
11:44It has happened, you are absolutely right, to some measure in various parts of the country.
11:50But at a pan-India basis, on an accelerated pace, that's why we are suggesting a kind
11:55of an institutional mechanism to pursue that.
11:58The government has already, you know, passed some of the labor bills and acts have been
12:03passed but notification is still pending.
12:07Is the industry body asking for faster implementation of those acts or notifications on a state
12:14level?
12:15Labor is a state subject here.
12:18Yeah, so that's why we have suggested, you know, we need to create the mechanism to get
12:25consensus on some of these areas like you mentioned, so that, you know, the labor codes,
12:30etc., that the government has already drafted can get notified.
12:35Absolutely.
12:36Sir, you broadly spoke about the energy transition that we are looking at, but at the same time
12:44you are also looking at institutional reforms on the power side.
12:49Can you elaborate a little bit on what kind of reforms are you looking at from a power
12:53side and where does the center come into play in this?
12:59No, see, there are areas, you know, all these set of reforms, there are some that have touch
13:09points in the center and state.
13:11That's why we are saying the institutional mechanism to, you know, build the consensus.
13:17So build the consensus, maybe provide the, you know, where required and where appropriate,
13:24some resources, some incentives to do that.
13:26So in the power sector, you know, there are issues of all costs like there is some cross-subsidization
13:31that happens.
13:32There are also larger issues about the fiscal stability of some of the – in the power
13:40sector.
13:41There are also issues of the, you know, transition in the power sector.
13:44If you are going to go the EV, EV method, then what kind of grids are required, there
13:51is also this piece about energy transition.
13:54So many, many facets to this whole area of the power sector.
13:59You know, I just want to touch upon two more subjects, the one being increase in CapEx.
14:07You know, what you are suggesting is that, you know, the CapEx should be increased to
14:12nearly 25% – by 25% of the revised budget estimate.
14:17It's currently 16 odd percent, which is there.
14:20Do you think that there is enough elbow room for the finance minister when she presents
14:26a budget to increase the CapEx outlet?
14:29See, it is right now sitting at 16.8%.
14:36So we are suggesting that this be taken up to 25.
14:40And there is also additional resources that come in – have come in this year.
14:44So part of that can be deployed in this area.
14:49And you know, the entire argument which many are making about, you know, that there may
14:54be some kind of welfare economics that may be tied into the budget, given the fact that
15:00now, you know, you have coalition governments, partners, part of the NDA, part of the government
15:08now.
15:09And also the fact that, you know, elections have given out a verdict, which looks at a
15:14little bit of rural distress.
15:15So maybe welfare economics is something which may be one of the legs of the budget, which
15:20will continue as it is.
15:26So let me say that, you know, the requirements, immediate requirements, you know, the government
15:33has been taking proactive measures in the past also, through increase in MANREGA, through
15:39the direct benefit transfers and other such measures.
15:42Of course, those need to be provided for as deemed appropriate.
15:47But what is most important is to create a virtuous cycle so that the growth and, you
15:54know, progress in the economy is – and rural included in that – is through a sustainable
16:00basis.
16:02And the only way to do that, I think, is an investment approach of investment-led inclusive
16:07growth.
16:08That's a model that's been followed in the past.
16:10And that's why, you know, that's why let's remember, that's the reason why in India we
16:16are at a much stronger wicket.
16:19When we looked at some – when we look at some other parts of the world where the – another
16:24methods of – other methods were deployed, in fact, that has created a lot of – a lot
16:30of stress in the economies at this point of time.
16:33And in many cases, in many, you know, areas where there has been shrinkage of consumption,
16:39just coming back to pre-COVID levels and so on and so forth, India is on a much stronger
16:43wicket.
16:44We are on a growth path.
16:46We are saying we need faster growth and absolutely that's the way to go because that's the potential
16:50to India.
16:51That's the potential of India.
16:53Why this consumption is on stress, you must also understand, it's largely on account of
16:58external factors.
17:00The geopolitical – the geopolitical crisis, the, you know, the disruption in supply chains
17:07and that lead – and the climate emergency led to inflation and cost of everything has
17:13gone up.
17:15So that has its impact but then it is all, you know, and the stress has come on the back
17:20of the COVID years but it's all – India has been very resilient, has recovered fast.
17:25Many sectors have recovered fast.
17:27Some sectors have not completely recovered but they're all on the right direction and
17:33I think so this path of inclusive investment-led growth is the way to go and we'll be in a
17:38more sustainable path with passage of time.
17:41And in the near term, there are many positives as we discussed earlier that will also help
17:46improve consumption.
17:47Sir, one of the major reforms that you're looking at is the direct tax reforms which
17:53is there.
17:54You're looking at some of the changes to the TDS provisions, you know, pruning down of
17:58some of the rates which are there, much more, you know, rationalization of capital gains.
18:03Now that's very touchy subject from – for the markets and for some of the, you know,
18:09for the corporates there.
18:10Can you take us to the rationale for this and do you think that there is enough, you
18:16know, buoyancy in tax for the – for the finance minister to, you know, take this kind
18:24of steps?
18:25No, no, we are not – we are not – you see, these two suggestions do not, you know,
18:33are more to do with the ease of doing business and simplification instead of having, you
18:38know, multiple rates and different treatment of capital gains for different treatments.
18:42These are not – these are not suggestions that are supposed to – that they are not
18:47seeking any reduction in tax rates.
18:49It's more around looking at simplifications so that ease of – ease of doing business
18:56improves.
18:57That's – that's – it's more around that principle.
19:00Also you are seeking a status of infra for hospitality, both from a central point of
19:07view and from a state, tourism and hospitality should be considered as an infrastructure.
19:12You know, I know the industry has been asking this for many years now.
19:17Do you think that it should come in now, given that tourism is taking off in a big way and
19:21hospitality is – is one of the sectors where we see the maximum capex coming in from – in
19:27some form?
19:28Absolutely.
19:29You know, this is also the sector that has got huge economic multipliers.
19:38It creates a lot of micro enterprises, self-employment.
19:41The impact on the economy is tremendous and – and it's a great opportunity.
19:47Right now we are seeing a lot of buoyancy in domestic tourism and with better connectivity,
19:53investments happening, there's a lot more opportunity in this space and, you know, our
19:58– our global tourism is – is not yet – yet buoyant.
20:02So that's the opportunity to build up.
20:04We believe that as – as the global economy normalizes, improves, the – the global tourism
20:09will also – will also pick up and that's a tremendous opportunity for us.
20:13G20, I am sure, has whet the appetite of the world to see what India has to offer because
20:18of the manner in which a very interesting way that G20 was conducted that it took it
20:24to – that it was taken to all parts of the country, all parts of the country were showcased.
20:29So this is a time when we should provide further impetus to the tourism sector.
20:35Industry and government can work collaboratively to develop a certain number of centers of
20:39excellence as has been envisioned.
20:42And a good time also to launch a, you know, campaign around incredible India to, you know,
20:49showcase to the world what all India has to offer.
20:51Sir, my final question to you is about private CAPEX.
20:54That's something which has been, you know, very slow to start.
20:58We've seen some kind of green shoots.
21:00But what is your assessment, where is that private CAPEX coming in initially and will
21:05it take off and, you know, take, you know, the space which the public CAPEX may be, you
21:13know, the void which may come in in the next few years from public CAPEX, will it be able
21:18to cover that void?
21:23So look, first of all, let me say that it is not just green shoots.
21:27Private CAPEX is on a firmer footing.
21:30It stands at 23.8% of the gross fixed capital, I mean, the private CAPEX is 23.8% of GDP.
21:41It is higher than the pre-COVID number.
21:44And the trajectory is in the right direction.
21:47So it should only go forward.
21:49And if you look at the gross fixed capital in the economy, you know, the share of private
21:57investment has not actually reduced.
22:00The share is fairly consistent with what it has been historically.
22:05So in a way, you know, we are seeing that private CAPEX is keeping pace.
22:09Let's remember that in between it was, I agree with you, it was a little slow to take off
22:13because they were the COVID periods.
22:17And then post-COVID it has started to pick up.
22:20And now it's on a much firmer footing.
22:22Mr. Puri, it was a pleasure talking to you today.
22:26Thank you for joining us on NDTV Profit.
22:28That was Sanjeev Puri, who is the Chairman of ITC and President of the Confederation
22:32of Indian Industries, discussing the recommendations that he has presented to the Finance Minister
22:38with respect to the forthcoming budget.
22:40Thank you for watching.