Differences among NDA hurting economic reforms -- CII

Differences among NDA hurting economic reforms -- CII
PRESS TRUST OF INDIA

New Delhi, April 30: The Confederation of Indian Industry (CII) has criticised the ruling National Democratic Alliance (NDA) for voicing differences over economic reforms and asked the government to unitedly pursue liberalisation policies to attain over seven per cent economic growth.

"Different partners of ruling NDA are talking in different languages. It is necessary for them to understand that economic issues and reforms should be carried forward," the newly-elected CII president Arun Bharat Ram said here on Saturday.

Bharat Ram vowed to embark on a campaign among political parties and MPs to bring about a consensus on reforms from next month, saying the country could not afford any laxity in this direction.

He said that members of the ruling alliance were giving contradictory signals on the issues like privatisation and subsidies and regretted that pace of privatisation was "too slow and many companies should have been privatised by now instead of just Modern Foods."

Asked if Congress president Sonia Gandhi's recent comments that reforms had not benefited the poor and there was a need for a relook at the policies, implied a reversal of its policies, he said, "We may not call on Sonia Gandhi but will certainly meet Congress leaders to emphasise on the need for continuation of reform policies."

The Chamber would start its campaign next month by meeting MPs from left-dominated West Bengal to "educate" them on reforms and privatisation, Bharat Ram added.

Emphasising that government should not hesitate from taking hard decisions, Bharat Ram sought amendment in the Constitution to make agriculture income taxable.

The government should also eliminate subsidies in a phased manner and exclude the tax payers from the benefits of the public distribution system (PDS), he added.

"We want agricultural income to be taxed but since farm sector is a state subject it would require an amendment in the Constitution," he said. Bharat Ram said it was necessary to "create some degree of understanding among the political parties both in and out of power to sustain the process of economic reforms."

"Economic reforms are critical as the economy needs to grow at eight to nine per cent to generate sufficient employment," he said but added that there was no possibility of reversal of reform policies.

The government should also be clear about its motive behind privatisation, he said, adding that the government had to get over its "revenue fetish".

"The government must understand that privatisation should not be looked upon as an avenue to raise money for fiscal deficit or revenue deficit collection," he said.

The objective of privatisation should be to enable the public sector companies to operate independently and run as professionally-managed companies, he said.

Bharat Ram said that CII had no objection to compliance of corporate governance code being formulated by the market regulator Securities and Exchange Board of India (SEBI) for the listed companies.

"SEBI code is akin to that prepared by CII. We have no problem if it is made mandatory by SEBI," Bharat Ram said but added that the Chamber would not force its members to adopt the CII code as it was voluntary.

"We can't force our members to it. Anyway, we are the first to bring out the code," he said, while admitting that only a minuscule number of CII's nearly 4,000 members had adopted this.

"Though only 24 of our members have adopted this, they have about 20 per cent of the market capitalisation in the country," he added. Bharat Ram said that new infotech firms would have to work in tandem with the old economy companies for their success while pointing out that valuation of the dotcom companies was generally not understood.

"Don't go by their valuation," he said and suggested that SEBI and other vigilance authorities should take appropriate steps to guard against recurrence of "fly by night" companies to protect investors.

Admitting that the current stock market spurt was on account of high valuation of dotcom firms, he said SEBI should ensure that there is no fraud in the stock market.

"Since there is a lot of volatility on the stock exchange, SEBI will have to control any fly by night operators who may cause the stocks to tumble," he said.