Prime Minister Narendra Modi on Friday told business leaders to take risks and make investments without fear of penal action if genuine commercial decisions failed, as the government attempts to spur slowing economic growth in the face of a decline in corporate investment and household spending.
At the annual conference of the Associated Chambers of Commerce and Industry of India (Assocham), which is celebrating 100 years, Modi also reiterated the message he delivered at the 17th Hindustan Times Leadership Summit (HTLS) on December 6 to bankers — to go ahead and take “genuine business decisions” without fear. Finance minister Nirmala Sitharaman reinforced the call by urging industry to shun self-doubt.
“Today, from this forum of ASSOCHAM, I want to assure the people linked with the banking sector and the people from corporate world that flaws of the old system have been leashed to a great extent. Therefore, take decisions without hesitation, invest without reservation, and spend without fear. I assure you that no inappropriate action will be taken for right choices and for genuine commercial decisions,” the prime minister said.
“From this forum I would tell industrialists of this country that you move forward, you are capable and competent. The entire global market is in front of us. We have the courage to challenge the entire world. Your resolve, your abilities are going to play a major role in realising India’s dream of a $5 trillion economy,” he said.
The Bharatiya Janata Party (BJP)-led National Democratic Alliance (NDA) government is seeking to boost economic growth, which slowed to 4.5% in the three months ended September, the fiscal second quarter, after decelerating to 5% in the preceding quarter.
It was the slowest pace of growth since March 2013, the sixth consecutive quarterly decline and seen by economists as the outcome of a double whammy — a slowdown in corporate investment and consumer spending.
Modi assured business leaders that the government was with the industry “to boost its morale, help agriculture and companies in improving their productivity, and support businesses in their continued efforts of ‘wealth creation’ and ‘job creation,’ he said.
The PM said his government has decriminalised several provisions of the Companies Act that were used to launch criminal action against business leaders for making even a small mistake. He said a process was underway to bring more such changes.
“Without wasting any time, you bring them [laws that criminalise minor lapses] to my notice,” he said.
The opposition has accused the government of mismanaging the economy and of failing to revive growth. “I’m well acquainted with the debate taking place today related to the economy. But, amidst such debates, we must also remember that the GDP [Gross Domestic Product] growth rate had reached up to 3.5% in one quarter during the previous government [of the United Progressive Alliance],” Modi said.
He also noted that during the UPA regime, inflation measured by the Consumer Price Index had accelerated to as much as 9.4%, core inflation (a measure, of non-food, non-fuel inflation) had touched 7.3% and the wholesale price index reached 5.2%.
“Where was the fiscal deficit? 5.6% of the GDP. At that time many quarters of GDP were very disappointing for the economy. I do not want to be caught in the argument {on} why some people were quiet at that time,” he said.
“Friends, the country’s economy has also witnessed such rise and fall in past. But, the country is capable of coming out of such situations every time, and it came out stronger than earlier. Therefore, India will certainly come out of the current situation,” he said.
Sitharaman, who spoke immediately after the Prime Minister’s inaugural address, asked industry to come out of “self- doubt” and revive the animal spirits in the economy, noting that the government had taken several steps to boost growth since August. The steps included corporate tax cuts that involved a revenue sacrifice of ₹1.45 lakh crore.
“I would appeal to you that please get out of the mood of self-doubt. Can we do it? Can India do it? … Why is this negative mood? Get out of this self-doubt,” she said.
Inflation is under control, hovering around 4% or below. Sitharaman acknowledged the high prices of onions, but said it was a seasonal phenomenon.
Congress’s senior spokesperson and former commerce minister in the UPA regime, Anand Sharma, said the Indian economy was in a shambles and the crisis could worsen next year if government does not take urgent steps to tackle key economic issues
“Such loud talk by a Prime Minister and hollow promises that are far away from the truth!. The prime minister remains in a denial mode and he is selling this pipe dream of a $5 trillion economy for which the economy has to register double-digit growth now for five years,” he said.
Anil Agarwal, founder and chairman of the Vedanta group, said the target of transforming India into a $5 trillion economyby 2024 was achievable because the government was supportive. Citing the examples of the US and China, he said the industry in those countries had achieved similar targets because their governments ensured that once work started on a project, it would achieve completion.
