India, Indian economy, growth. Tough times.
Deepak Parekh: Yes, these are tough times. Everything was going so well a few months ago. We were the darling of the western world and multinationals and everyone wanted to invest money in India. And suddenly, there is a snap. It was building over a period of time but it has really taken the wind out of our ambitions and I am very disappointed, saddened more than disappointed, to see whatís happening. What is happening is that businessmen are killing businessmen. MPs are eating MPs and Parliament. Media is eating media. There are half-a-dozen media people who are standing in judgment whether some of your colleagues were right or wrong. How can media people stand in front of other media? And itís the same in business versus business.
Shekhar Gupta: So everybody is being judgmental about their own.
Deepak Parekh: What is happening is a very sorry state of affairs if you look at the big houses in India today. The Tatas are investing abroad, not in India. They want to, but they canít.
Shekhar Gupta: Why is it that they canít?
Deepak Parekh: They donít get the land. They have old land, they donít get extension of the mining leases. Then someone accuses them of mining illegally.
Shekhar Gupta: You put them under pressure by accusing them of mining illegally and give the same mines to some crony of yours.
Deepak Parekh: I am aware of the fact that it has been 10 years that the Tatas have been trying to put up a steel unit in Orissa and they still havenít got the land. So why should they invest in India? If you see their (Tataís) strategy, they say they are getting 50 per cent of their revenues from overseas. You see the Ambanis, they are putting money in shale gas in the United States. Mukesh Ambani has gone on record to say that he has already put $5-6 billion in shale gas.
Shekhar Gupta: And he is going to invest another $12 billion in America.
Deepak Parekh: And Sunil Mittal. He has taken a huge debt on his Indian balance sheet to grow in Africa. What has happened in telecom globally is consolidation, but in India consolidation is not happening. There are so many players. No one wants to sell, no one wants to merge, no one wants to work together.
Shekhar Gupta: Particularly when people can move real estate money to telecom.
Deepak Parekh: Well, real estate money into telecom. Have you heard of that anywhere?
Shekhar Gupta: Well, so many real estate companies bought telecom in India.
Deepak Parekh: Yes. There are players like Tatas, Birlas, Docomo, Sunil Mittal. These are big boys with deep pockets. Still there are new players getting into it.
Shekhar Gupta: And just causing a mess of the market.
Deepak Parekh: It is only a scarce resource. Corner it, make money. Hoard it, make money. The other issue is that in legal cases, our jurisdiction must improve. How many cases are pending, where is the judgment? Where are court decisions being taken? The Satyam case is still going on. What are the charges? What is the final verdict?
Shekhar Gupta: So all these are driving Indian entrepreneurs away? Do you see Indiaís capital flying away, Indian investment flying away?
Deepak Parekh: The big boys are looking outside because there itís easier to do business, itís simpler to do business. Itís a straightforward business, itís no grey matter. You may pay a higher price to acquire companies, but in a year or two you make up for that.
Shekhar Gupta: You are a sort of friend, philosopher, guide and uncle of corporate India. Do people come and share this problem with you? Do they say, we canít do business in India anymore?
Deepak Parekh: Many people have talked about it. See, we need newer industrialists but we need genuine industrialists. We donít need cronies-come-lately. And this is all related to two or three areas. Land, land and land. Take urban land in Mumbai. If you make an IT building, you get a higher FSI, so you bid for the land. Then you get the government to change the definition of IT. In Mumbai, IT now includes banking, back office, insurance, asset management, private equity. Land aggregators are the ones who are making money.
Shekhar Gupta: People are building land banks.
Deepak Parekh: You see that happening in Alibaug, Panvel or around Delhi. The aggregators buy small land, accumulate them and then go to an industrial group and say, ĎI am going to give you the land at this priceí.
Shekhar Gupta: And the industrial group has a deal with the chief minister.
Deepak Parekh: So basically, the people who suffer are the original land owners. They sell it at a low price. The land aggregator adds his huge margin because he says he has to pay people and then again, the land owner suffers.
Shekhar Gupta: You were a member of the Prime Ministerís investment commission. Your job was to invite big ticket investments to India. Does it hurt to see Indian investment going out?
Deepak Parekh: I think Indian companies should also have overseas ambitions but not at the cost of growth. India is a growth story. For the next 10 years, we are going to get a 9-10 per cent GDP growth.
Shekhar Gupta: But not if the big Indian companies start moving out.
Deepak Parekh: Yes. Get big quick, get rich quickówe donít want those type of industrialists. You want industrialists to grow over a period of time. Tatas, Birlas, Relianceó all have grown over 30-40 years.
Shekhar Gupta: How does the PM fix this?
Deepak Parekh: You know the system has become so difficult. Corruption is part of our lives. The whole system is corrupt. What can the poor Prime Minister do?
Shekhar Gupta: How does this government reconnect with corporate India?
Deepak Parekh: I think there is a need to reconnect. There is disillusionment among the old corporate houses. The feeling is that we are not being given an equal opportunity because we are too straight. Those kinds of fears have to be dispelled by the PM. If Tatas can take 10 years to get land, then what is the future of other industrialists?
Shekhar Gupta: Because Tatas, for all their alleged lobbying clout, havenít got a single mining licence in 10 years. All kinds of crooks are now squatting on mines.
Deepak Parekh: And the ironic thing is that in this government, we have the largest number of professionals. Honest people and professional, yet we are unable to do anything and it has become worse.
Shekhar Gupta: If you look at this Cabinet, it has the largest percentage of truly honest people. So corruption is one thing. The second is communication and attitude. Where do you think has the government gone wrong? Where have the corporates gone wrong?
Deepak Parekh: Well, the government has liberalised a lot of issues. They are talking so much about opening up new sectors but they are doing nothing about it. Take insurance. For five years, we have been hearing that itís happening tomorrow. It just goes on. I know it may not be high in the priority of the government but for foreign companies, itís a huge thing. India can get $3 billion if they open up insurance. Retail is one, defence is another. Look at the amount of money we spend on defence.
Shekhar Gupta: So the governmentís credibility suffers.
Deepak Parekh: The government has to take decisions. You canít keep everything under the carpet.
Shekhar Gupta: There is also this new mindset that corporates are crooks. That the state is being taken over by corporates. You are saying that corporates have been victimised.
Deepak Parekh: I think the fault is on both sides. There are corporates who like to get quicker decisions by paying off. So, you have to come out with some lawówhy is the giver not penalised and only the taker penalised? But you know the growth opportunities in India are so tremendous. Weíve never been in this positive situation when the entire world is looking at India.
Shekhar Gupta: So what are the three things that the Prime Minister should now do to change this mood?
Deepak Parekh: First of all, the Prime Minister is handicapped because itís a coalition government. Coalition members are pulling in different directions. What could the PM do?
Shekhar Gupta: Within his limitations, what are the three things that the PM should do now?
Deepak Parekh: I think he should get back to the big groups who have a proven track record. Decisions have to be taken faster.
Shekhar Gupta: What has made you find so much negativity?
Deepak Parekh: Disbursements on large projects are not happening, environment issues are coming in the way of development. Now, we want the environment to be protected, we want ecological improvements, but somewhere, we have to draw a balance. Do we want growth, and if we want growth, we have to make some sacrifices or take precautions. But you cannot say that you cannot give permissions. There is a disconnect between the industry ministry and the environment ministry. My personal view is, look at the existing industries that are creating all the pollution, emissions. They are going scot-free. Why canít you try and clean the existing ones? I think you should have a responsibility to improve the existing industries. Donít block a new entrant. And I donít think weíve lost it.
Shekhar Gupta: We can lose it.
Deepak Parekh: Today, various people are asking if the growth in India is going to last.
Shekhar Gupta: So what does the PM do to sort out things like mining linkages, mineral linkages, environmental clearances. These are the few bottlenecks.
Deepak Parekh: See, the different ministries have to work as a team. If each manager or each departmental head pulls in different directions, you will not have a good company or good results. The big boys in the government are pulling in different directions and not working as a team. We all have the same objective to see a better India, to see a prosperous India.
Shekhar Gupta: You find the big boys in the government too distracted or following their own agenda?
Deepak Parekh: No, they are following their own departmentís agenda and not looking at the broader picture. I think the PM has to get that organised.
Shekhar Gupta: Do you sometimes get the feeling that the Prime Minister has become a bit distanced or preoccupied?
Deepak Parekh: No, I donít think so. I think he is trying his best but I feel he is in that position because of coalition parties. Coalition parties have different agendas.
Shekhar Gupta: He is also in the situation because of the peculiar situation in his own party, as he himself tells you. Circumstances have made him the PM. And I think he takes that argument much too seriously.
Deepak Parekh: I think he has a good opportunity. We still have three-and-a-half years of his government. And suddenly, we see in the papers Ďmid-term pollsí. We donít want a mid-term poll. We just had elections. We want to see growth for three years.
Shekhar Gupta: And that should apply to the Opposition as well thatís blocking Parliament for the whole session.
Deepak Parekh: Democracy is coming as a disadvantage. No Bill could be discussed, no Bill could become an Act. There are so many pending issues in Parliament.
Shekhar Gupta: Have you heard the tapes? Have you read about the tapes? What do these tell you?
Deepak Parekh: I havenít heard the tapes. I donít want to waste time on that.
Shekhar Gupta: You talked about all this negativity. Have the tapes contributed to some of it?
Deepak Parekh: I am not interested in reading (about) the tapes but the simple question is, why was the phone tapping done? You canít have telephones tapped for two years. That is invasion of privacy. Even if itís a crook, even if someone is doing something wrong, does it take you two years to find out whether something was wrong? You take action against that individual, you act against that individual. You question that individual. If you continue tapping the phone for two years, it is an invasion of privacy.
Shekhar Gupta: Have you spoken with Ratan Tata? Or with Mukesh or any of the people?
Deepak Parekh: No, but there is a concern that if phones are tapped, then one has to be extremely careful because some of the conversations are strategic. Some of it is business secret, some of it is confidential. Itís your new venture.
Shekhar Gupta: So do you think the PM can bring in some calm or he should try and bring in some calm?
Deepak Parekh: I think the team has to function cohesively, the senior ministers. One man canít do so much but he has to say something and then the team has to be incentivised to work together. The industry minister gives you permission; environment (ministry) stops it. The state government gives permission to build Lavasa, environment (ministry) says stop it. After so much bank money that has been invested and after so many years... they are trying to create a new township. I have gone and seen Lavasa. I think HCC (Hindustan Construction Company) has done a remarkable job ó itís not that he has built it without government approval. But you canít give an order now that you stop construction and get back to 2003 or 2004 levels. What are we trying to do, break it down?
Shekhar Gupta: All I can say is that your speaking on the subject brings in calm. Everybody knows that your personal interest in any of this is zero. You spent so much time in Satyam for not even a rupee. You are seen as a captain who doesnít get paid, but bowls, bats, fields and also lifts the finger when somebody is out.
Deepak Parekh: As I said in the beginning, I feel saddened. Which year has India had the US president, the French president...all in one year and in quick succession?
Transcribed by Deepali Sharma