A strong govt can help economy grow 6.5% this year: Ajay S Shriram, CII.

NEW DELHI: Corporate India believes that the country's economy could resurge to grow 6.5% this year if a strong reform-minded government comes to power after the upcoming parliament elections.

But a 'business as usual' approach (a thinly veiled reference to another UPA term) could mean growth lingering at current levels or improving moderately, while a fractured mandate could trigger panic in an already subdued economy, Ajay S Shriram, president of the Confederation of Indian Industry (CII), said on Tuesday.

"What we hope for is an aspirational situation where growth can re-scale the 8% mark by 2016-17 if we get a strong government in place that moves to implement economic reforms in a more aggressive manner," he said.

Shriram, chairman and senior managing director at DCM Shriram Ltd, was elected CII president this Friday.

"The most critical focus (for the new government) has to be on job creation and reviving economic growth," he said. "India has 422 million people between the ages of 13 and 35 and the country will face serious social and law and order problems unless we create enough jobs," he warned.

Shriram said around 15 million jobs can be created each year if there is a sharp focus on mass manufacturing as well as services sectors like tourism, education and construction, accompanied with changes in archaic laws relating to labour and contract enforcement and a fast-tracked expansion of infrastructure.

Stressing that it is difficult to forecast growth with the economy in a subdued state in recent years and investments stagnating, the CII president said that a fractured electoral mandate with no clear winners could push growth below 5% and make the economy vulnerable to any external triggers such as an oil price shock.

"Investor confidence would be lost and jobs would be destroyed in the case of a fractured poll outcome. Add to that the uncertainty of monsoons this year due to the El Nino effect, which could push up food inflation and force the RBI to keep interest rates high, and it may be time to panic," Shriram said.

Seeking urgent attention from the government for manufacturing which is in the doldrums, the CII has said that the Delhi-Mumbai Industrial Corridor and the national manufacturing investment zones be fast-tracked and production of electronics and hardware be encouraged to curb imports from China.

Backing market-driven prices for energy, Shriram expressed concerns about India's rising coal import bill. "We have such large coal reserves, but are importing 100 million tonnes of coal each year at a cost of $20 billion. We must examine how the private sector can work with Coal India to expand the country's output," he said.

He also said the CII would work with the next government to expedite the entry of foreign universities into India so that the country could save almost $25 billion of foreign exchange spent annually by students going overseas for higher education.

The industry would like easier and faster processes for acquiring land, which currently takes around 56 months and should ideally be brought down to 24 months, Shriram said. "We must also examine how industry could utilise 65 million hectares of wasteland in the country," he added.

Source : economictimes.indiatimes.com