In an exclusive interview with Kanchan Srivastava, Ramachandran Ganapathi, President of South India Chamber of Commerce & Industry (SICCI) explains the unprecedented crisis before the industries due to novel corona pandemic. Mr Ganapathi, who is also the Managing Director of the Mumbai-based multinational IT company Trigyn, seeks stimulus and tax reconsideration. Excerpts of the interview:
Q: Reserve Bank of India Governor Shaktikanta Das has unveiled a slew of measures to deal with the adverse impact of novel corona virus on Indian Economy. What is the takeaway from his announcements?
If you ask me to give you one phrase to describe the announcement by RBI, I think he has delivered big time. As an industry body, we have been writing to RBI and also to the government about industries’ need across verticals. The most stressed sector was the NBFC Sector, the last mile deliverer to the economy. The RBI’s move (25 basis points reduction in reverse repo rate, keeping 90-day NPA norm out of moratorium period, no dividend pay out as of now among others) has brought lot of confidence and cheer amongst them. We can’t forecast when the economy picks up, but from the operational and sustainment perspective, the RBI’s announcements are significant.
Q: Is this going to boost the lending of the banks?
Mr Das has pushed the bank towards the situation where they have to hit the market and lend for their own survivals. Earlier, they could just park their money and get comforted that they were earning on it. Now, they have to lend taking all the risks, something which almost disappeared in the recent past. This should see the system being injected with lot of liquidity.
Banking experts suggest that Non-performing assets (NPA) rules should be relaxed. Do you agree with this idea?
Yes. The NPA rules and Insolvency and Bankruptcy Code (IBC) should be suspended for a year. The unusual scenario called for unusual steps, heavens are not going to fall with the IBC’s to be suspended or the NPA’s rules to be kept abeyance. The supply and the demand side, both have seen destruction. It has never happened before, at least not during our life time. People have told me that it happened during the world war II or the great recession.
The status quo ante will not be restored in one, two or three quarters. It is a long call and the companies must be given that head room to recover and start building profits. Once the lockdown is completely removed, then the industries will start crawling. They should be allowed to scale up and then get back to business and collect revenues. The government should be considerate enough about statuary dues that companies pay in term of income tax, GST and also PF, EPF contribution etc, for a year and then review it after a year.
The government is conscious about it. The RBI Governor coming and talking about economy and then activating it twice in a month, indicates that the RBI and the government realise its unusual time. I do expect the Finance Minister (Nirmala Sitharaman) to come up with some stimulus in the next 10-15 days. We need to take decisive steps frequently and keep reviewing them.
Q: What kind of stimulus industries are looking for?
Cash abundance at low cost. We have to get the supply back, get the consumption going, get the demand in place across the sectors. The agriculture sector needs urgent attention. From harvesting, cold storage, warehousing, logistics, retailing, I think we need to quickly act. We need to get the migrant labourers back, construction must start. It’s important that semi-skilled and unskilled get back to work quickly.
With regards to the recent amendment in Foreign Direct Investment policy (no investment by neighbouring countries sans the government permission), how do you think it is going to impact companies in particular and Indian Economy in general?
It’s more about protection of companies than revival of economy. The companies will attract foreign investment based on the rules and regulations that exists across sectors. Some sectors can have 100 percent FDI. It should be left to the companies how much investment they seek, but there should not be backdoor attempt to take over the companies.
Are we moving towards socialism once again?
When you travel on a highway you do take a bypass, occasionally. This is the compulsion of circumstances.
Goldman SACS, IMF and World Bank predicted that India’s GDP growth could be 1.5 or 1.6 % this fiscal owing to pandemic. What needs to be done to stop the fall further.
Some have even predicted negative growth. However, it is impossible to predict the growth considering the unusual and everchanging situation. The last ball of this test match (Covid19) has not been bowled yet and we don’t know how it’s going to be bowled. It all depends on the discovery of vaccine or when 50 percent of world population develops immunity against the novel corona virus.
We are unable to calculate the industrial productivity at this point of time. It is futile to even guess. This is something where no back of the envelope calculation is going to be correct. FY 21 has to be played by the year, it’s going to be a ball by ball game and its only on 1 April 21 you can guess what it is.
Are you expecting some tax waiver?
The government involvement in the revival of economy is very important. But the governments can’t do as much as we want. There will be a mid-point where both the government and the industry will come and agree.
