Pranab meets industrialists to allay India Inc concerns

IANS/New Delhi

(From left) Business leaders Anand Mahindra, Anil Ambani, Y C Deveshwar, Narayana Murthy, Sunil Bharti Mittal, R P Goenka, Ratan Tata and G M Rao with Finance Minister Pranab Mukherjee and Minister of State for Finance Anand Sharma during a meeting in New Delhi yesterday

To allay concerns of India Inc, Finance Minister Pranab Mukherjee yesterday held a marathon meeting with top industrialists, including Ratan Tata, Anil Ambani, Sunil Mittal and Anand Mahindra and said the government was not suffering from policy paralysis.“There has been some cynicism expressed of late regarding lack of adequate movement on policies and institutional processes. This is based more on perception than facts,” Mukherjee told the industrialists during the two-and-half-hour meeting. He claimed that the government had taken several significant policy initiatives in the recent past and “many others were in the pipeline”.Mukherjee said important financial sector legislations were being pursued. “Some of the bills introduced in the last session including Banking Laws Amendment Bill, Factoring and Assignment of Receivables Bill, the Pension Fund Regulatory and Development Authority Bill, Insurance Laws Amendment Bill and Life insurance Corp Bill were expected to be passed in the monsoon session of the parliament,” according to a statement released after the meeting. The finance minister asked India Inc to suggest ways to boost industrial and economic growth. He said the government has set up a panel of secretaries to take note of sector specific concerns. Other top industrialists who attended the meeting were ITC’s Y C Deveshwar, Infosys’ N R Narayana Murthy, GMR’s G M Rao, TVS Motor’s Venu Srinivasan, and RPG’s R P Goenka. Commerce and Industry Minister Anand Sharma and top officials like Finance Secretary R S Gujral, Economic Affairs Secretary R Gopalan, Commerce Secretary Rahul Khullar and Chief Economic Adviser to the finance minister, Kaushik Basu, also attended the meeting. The finance minister said such interaction should help in building the synergy needed to propel the economy to greater heights in the coming months. On weakening of the business sentiments, Mukherjee said it had been partly due to an uncertain global environment and, also on account of rising cost of domestic credit. He said that a tight monetary policy had been necessitated because of the continuing challenge posed by inflationary pressure. AFP adds: A top advisory panel to India’s premier yesterday sharply cut its economic growth forecast this year to 8.2%, citing a string of interest rate hikes and global worries. Last February, the panel projected Asia’s third-largest economy would grow by 9.0% in the 12 months to March 2012, in line with the government’s own forecast. Growth was estimated at 8.5% last year. The lower forecast would still make India the world’s second fastest-growing major economy after China, but the country’s longest streak of monetary tightening in a decade has hit industrial output and investment. C Rangarajan, head of the Economic Advisory Council, said monetary policy should remain tight until inflation shows “definite signs of coming down”. Last week, India’s central bank hiked interest rates by a surprise 50 basis points, the 11th rise since March 2010, to combat inflation of 9.44% - the second highest rate after Russia. Most analysts see further rate increases in the coming months, while Rangarajan said he expected inflation to come down to around 6.5% by the end of March 2012. Noting weak US economic indicators and US and eurozone debt worries, Rangarajan told reporters the forecast 8.2% expansion was “high and respectable.” The panel’s latest growth forecast is lower than the government’s recently revised estimate of 8.6%. Some economists have suggested a figure as low as 7.3%. India’s economy expanded by 7.8% in the January-March quarter, the lowest in five quarters, reflecting the impact of the rate hikes.  While growth of 7% to 8% would be envied by Western economies, experts say India needs at least 10% expansion to lift hundreds of millions of its population out of crushing poverty. Neighbouring China is also tightening monetary policy to fight inflation. Its economy expanded 9.5% year-on-year in the second quarter. High prices have caused huge hardship for India’s poor, who are key supporters of the government, which is reeling from a string of corruption scandals. Rangarajan also said US and eurozone economic woes could hit India’s strong export expansion, which has been bolstering growth.