Emphasising that India has seen a large number of reforms in recent years, Urban Development Minister Kamal Nath today said even a lull in activities is taken as paralysis, since expectations from investors are too high.
Nath, leading the Indian delegation at the annual World Economic Forum (WEF) meeting here, also said even the US or Europe would not have seen as many reforms that happened in India.
“India has had a large number of reforms in recent years. No country has had as much liberalisation as India, be it the US or Europe. The stress in Europe did have some impact and, therefore, there was a lull which was taken as a paralysis because people think that India cannot see even a lull. This signal was wrong and needs to be corrected,” Nath said.
He was speaking at a session hosted by CII and Boston Consulting Group.
In response to a query on why not much foreign investments are coming into India's infrastructure and other sectors, Nath opined that "investors expect too much from India".
"There is a psyche that has developed that either there is bloom or doom. There is no middle path on expectations from India and therefore just a lull has been taken as doom. Because of this, even a small dip in growth rate in profits is perceived to be very bad as there has been very high growth in the past," Nath, also in charge of Parliamentary Affairs, said.
India expects to see about $1 trillion investments in infrastructure in the next five years to boost economic growth.
Nath, a key player in pushing FDI reforms in Parliament, noted that government needs to play a role in regulations.
"There has to be government intervention, although the best growth will be that is despite the govt and not because of government," he added.
"Earlier people used to tell me here at Davos that India has archaic banking laws and the government is too much indulgent there. "But again in 2009, I told those people that Indian banking has weathered the storm and has come out stronger. While the government is lending money to banks elsewhere, the banks in India is still lending to its customers," Nath said.
The slew of reform initiatives from the Indian government, in recent times, include liberalisation of FDI policy in sectors like retail and aviation sectors. Last week, steps towards partial deregulation of diesel prices were initiated. In reply to a query, Nath said that India and other parts of Asia are ready to witness robust consumption-led growth.
Asia makes up for about 60 per cent of population but only 20 per cent of overall global consumption. "When we look at these figures in Indian context, we find that consumption is fuelling India's growth. There is a growth not only in income but also in disposable income," the Minister said. However, he said that Asia has to first tackle developmental imbalances and stressed on the importance of inclusive growth.
"We need inclusive growth and in India we have minimum employment guarantee programme for that. The difference between urban and rural youth has gone and India today represents an aspirational class of society," he added. According to him, Asia has the potential to become a very large trading bloc.
"A lot should happen in the next decade and the best time for Asia and India might be there soon," Nath said. He also added that India is open to collaborations with China in the information technology sector. To a query on changes in leaderships, Nath said in Asia, leaders are more often getting re-elected and there is no lack of leadership in the region.
Participating in a session, industrialist and Confederation of Indian Industry (CII) President Adi Godrej said that aspirations of the country's people need to be met through innovation.
"Established formats of product design and marketing will no longer be valid. We would need to meet the aspirations of new consumers through innovation and tailored design of products. The Tata Nano, Tata Swach, Godrej Chotukool etc are all fine examples of addressing low-income segments of society," Godrej said. Citing a study by McKinsey Global Institute, he said that total consumption in India is likely to quadruple and make the country the fifth largest consumer market by 2025.