When Congress Vice President Rahul Gandhi stood to deliver his valedictory address before FICCI on December 21, he redefined the ground-rules of engagement between India's political system and Indian industry. He talked about the need for the regulatory system to be rapidly and radically modernized to speed-up the pace of economic growth in the country.
Shri Gandhi, in his speech lauded the contribution of Indian industry to nation building and making India one of the fastest growing economy in the world over the last decade.
'Over the last decade we have achieved the fastest economic growth in the history of India. Despite global headwinds, Indian industry has sustained growth because of the energy of our business community. The political stability and rational policy environment provided by our governments also made this possible,' he said.
He highlighted the strong connect between the Congress and the Indian industry and referred to the industry as 'stakeholders of the Congress Party.'
'Our bonds with you date back to 1931 when Mahatma Gandhi addressed FICCI's fourth Annual Meeting. We have charted the growth of our nation side by side. You understand the global economic environment well; listening to your voice and heeding it is imperative,' he said, highlighting the need for the polity and industry to work together to take India forward.
Talking about the need to overhaul the regulatory and decision making process, he said, 'I am in complete agreement with the need for the regulatory system to be rapidly and radically modernized. Frankly, there are no excuses for the length of time required to clear some of these projects. We are a fast moving economy. We cannot allow you to be held back by slow decision making. Accountability has to be clear, fixed and time bound.'
Shri Gandhi also highlighted some of the steps taken by the Union Government to speed up the decision making process.
'The Cabinet Committee on Investment and the Project Monitoring Group are a recognition of the need to fast track clearances. Some 300 projects with an investment of over Rs. 5 lakh crores, about 5% of GDP, have been cleared. Sectors affected by delays in clearances such as power, petroleum and mining have been the biggest beneficiaries of this focused approach. Of course, many projects are still stuck ' some for good reason and some for no good reason at all,' he said.
Taking the issue of Environmental clearances head-on, Shri Gandhi said, 'Many of you have expressed your frustration with environmental clearances that are delaying projects unduly. There is excessive administrative and judicial discretion. The loopholes are so big you can drive a truck through some of them! Environmental and social damage must be avoided, but decisions must also be transparent, timely and fair.'
He also highlighted some steps the government is taking to ensure that clearances don't end up delaying projects. 'The UPA Government is considering a Natural Resource Investment SPV. The idea is to obtain all clearances before auctioning projects to private players. This is a powerful and innovative idea,' he said.
The Congress Vice President also advocated improved access to land for faster economic growth. 'Accessing land is difficult and time consuming. It's a struggle. The black market in land has got to go. We need to build a robust and open real estate market, so that businesses, especially small startups, have affordable access to land,' he said in his speech.
Later, answering a question on the impact of the new legislation on land acquisition and if the government has abdicated its responsibility, Shri Gandhi said laws that increase transparency would save the industry from hidden costs.
'The government has not abdicated its responsibility. There are large infrastructure spaces where acquisition is still possible. The real issue is that there is a cost for not having a land acquisition law. And I will give you two examples. India has become extremely politically competitive and people will mobilise around these issues. Take the Tata example in West Bengal, the absence of a law is what allowed a political mobilisation that cost Tata,' he said.
'With increased transparency, with the RTI, you will find that this law will protect you. It will protect you from hidden costs by creating a transparency outcome,' he said. 'The politics of this country is changing and the levels of transparency are increasing. So we need to provide you a framework,' he added.
Shri Gandhi said he saw the manufacturing sector as an area of opportunity: 'India must become the global leader in manufacturing. This has to be one of our core missions. Let's target growing the manufacturing sector to 25% of GDP generating 100 million new jobs in the next decade. I sincerely believe that this can be done. The dramatic improvement we need in productivity demands that we provide the right enabling environment,' he said.
'This will require the political will to make difficult reforms in labour laws. Old labour laws have forced businesses to use contract labour. As you know, they are often underpaid and unprotected. India needs a modern and flexible labour market where labour has a fair share and is protected by international labour standards,' he added.
'We must reform the power sector and ensure that businesses have reliable and affordable access to power.While absorbing the latest technologies from around the world, Indian manufacturing must also be built around Indian patents,' he said, sharing his thoughts on the issue.
'We have to open up our manufacturing sector and foster competition. The Industrial Corridors ' Delhi-Mumbai, Mumbai-Bengaluru, Bengaluru-Chennai and Ludhiana-Kolkata 'will revolutionize high value added manufacturing and provide millions of jobs,' he elaborated.
'Agriculture is an equally high priority. We are on the threshold of a second Green Revolution. Price realization and improved productivity have raised farm wages significantly in the last decade. We have made greater investments in critical areas such as micronutrients, microirrigation, satellite weather forecasting and access to affordable credit to farmers. Our efforts to raise productivity and farm income will continue unabated,' he added.
Shri Gandhi, however, also talked about the Congress' agenda of inclusive growth as he said, 'We believe that economic prosperity must include everyone. Poverty is neither befitting of human dignity, nor is it conducive to good business.
I would like to state clearly that poverty cannot be fought without growth. Maintaining robust growth has enabled the UPA Government to invest in people. In ten years almost a third of India's poor have risen above the poverty line,' he said, highlighting the impact of Congress-led UPA's welfare programmes.
Responses to Shri Gandhi's speech from captains of industry:
1. Adi Godrej ( Chairman, Godrej Group)
' The high stress on resolving regulation and administrative procedures in Mr Rahul Gandhi's speech yesterday would greatly encourage investor sentiments and boost investments. As he mentioned, decision-making requires to be transparent, timely and fair, while the initiatives on corruption have to be followed up with action. I welcome Mr Gandhi's talk on partnership with industry for growth.'
2. Sunil Kant Munjal (Chairman, Hero Corporate Service)
'Mr Rahul Gandhi has clearly identified the immediate problems regarding project delays and highlighted the issues that must be addressed, such as land acquisition, regulatory and administrative hurdles, and environmental clearances. It is indeed very welcome that he has clarified his perspectives on building a robust and open real estate market. In all, Mr Gandhi's speech was spot-on and meets many of industry's concerns. Industry would now look forward to quick actions from the Government, taking a cue from Mr Gandhi's speech.'
3. Rajan Bharti Mittal (Vice-Chairman and Managing Director, Bharti Enterprises)
"Mr. Rahul Gandhi's interaction with the industry was very positive and it was very assuring to hear from him that while the Government is alive to the concerns of the industry, more needs to done and there is an urgent need for more reforms'¦Industry is quite supportive of Congress Vice President's vision of inclusive growth for India.'
5. Harsh Pati Singhania (Managing Director, JK Paper)
'Congress Vice President Shri Rahul Gandhi's comments regarding the economy and business are encouraging. His observations on corruption being a major issue, that slow decision-making was not acceptable and that poverty cannot be fought without growth, strike at the heart of the problem. He also talked about land acquisition, environmental issues, labour, agriculture and increased investment in education, which are all important subjects. Shri Gandhi's emphasis on creating jobs from manufacturing and bringing together industry and R&D were also very significant. His candour and willingness to understand the impediments to growth was refreshing. We in industry and business are hopeful that we will now see renewed positive action on key issues in the days ahead and Shri Gandhi's observations have come at the right time. '
6. TV Mohandas Pai (Chairman, Aarin Capital)
'Mr Gandhi had been articulate and his speech had content and clarity. "It was very, very good. It was a different Rahul Gandhi. (His) best speech I have heard..He had addressed the issues concerning his party upfront and had talked of the need of introspection in the wake of debacle that Congress suffered in the four Hindi heartland states'¦Industry was "upset" and middle class and youth had their concerns with the performance of United Progressive Alliance government. The elections have shown anger of middle class. He (Gandhi) said that the government was listening to people.'
7. Onkar S Kanwar (Chairman and Managing Director, Apollo Tyres)
'Mr Gandhi's speech had a lot of good intentions but it may not be easy for the government to deliver as only about six months were left for Lok Sabha elections. "He has made a lot of promises. (Let's) watch and see'.
8.Naina Lal Kidwai (Immediate Past President, FICCI)
'Mr Gandhi was very business-friendly'¦real issue in the country was not of framing policies but of their implementation.'
9. Kris Gopalakrishnan (President, Confederation of Indian Industry)
"His talk is comprehensive and touches real issues, which industry has been trying to grapple with in recent times. Gandhi's talk is reflective of the fact that he has his ears to the ground...Even as the economy has slowed down and investor confidence is not at its peak. At a time, when questions have been raised about India's commitment to reforms and growth, Gandhi's comments are music to the ears of investors, who would draw confidence from his speech.'
10 Venu Srinivasan (Managing Director, Sundaram Clayton Ltd and TVS Motor Company)
'For the first time, we have seen a political leader of Mr Rahul Gandhi's stature mention the need for a modern and flexible labour market of international standards. Industry would welcome a dialogue on how to create 'fulfilling and rewarding' jobs for our young people, as stated by Mr Gandhi. His support for manufacturing is especially welcome. This sector has a multiplier effect on job creation. This would mean a paradigm change for the country.'