We have become more circumspect in all new investments: Ravi Uppal

Interview with Managing Director & CEO, JSPL

India Inc has been arguing that the current economic crisis is because of an unclear policy framework and the innumerable hurdles in completing projects. Jindal Steel and Power Ltd (JSPL)' s Managing Director and Chief Executive Officer Ravi Uppal tells Sanjay Jog what he thinks are the reasons for the slowdown.Edited excerpts:

What is your take on the current economic environment, especially since the rupee's steep fall against the dollar?

A large current account deficit (CAD) and a lack of confidence in the economy and of a business-enabling environment are among the reasons for the fall of the rupee. The devaluation will lead to high inflation and the country's credit rating might take a hit. The flow of FDI (foreign direct investment) and FII (foreign institutional investment) will also be hit. The unprecedented fall of the rupee in such a short time could be construed as an expression of the declining trust in the Indian economy and its currency. Although the government has taken several steps in the recent past to stimulate the economy, including clearance of major projects and financial reforms to attract foreign investments, the positive outcome of these will take a while. The present economic crisis is essentially caused by a lack of clear policy framework and impediments faced in starting major projects, particularly during the last three years.

Will the food security programme further increase economic woes?

If the government is not able to generate additional revenue to neutralise the additional burden caused by the proposed scheme, it will add to the fiscal deficit that the government is trying to control.

Industry has expressed concerns over passage of the land Bill, indicating it would be impossible to set up projects because of higher land cost. How would businesses face this issue?

We are concerned about the long-drawn and circuitous process of approval/consent for acquisition and exorbitant price fixed at four times the market value. We have all along followed an approach based on voluntary consent of land owners, paying a better price, providing economic opportunities either in terms of jobs or creating self-employment opportunities around our factories. The effect of the land Bill can be partly mitigated if industry and administration work together to speed acquisition.

Some say passage of these two Bills will further increase the current account deficit. Do you agree?

Yes, if the government is not able to generate additional revenue to finance the food scheme and if new projects are held up due to land acquisition delays and environmental clearance.

The government has taken measures to curb the slide in the rupee and revive investors' confidence. Are they enough? Is the India growth story intact?

There are no quick-fix solutions to restore trust in the the value of the rupee. We need to increase our growth rate, demonstrate India as a performing economy on a steady basis. We need to make our policies more consistent, transparent and predictable.

The rising fiscal deficit and CAD have to be controlled. The Union government has to act boldly and continue with increased momentum, financial and administrative reforms and divestment programme. We need to unshackle the economy and encourage major growth on the supply side. The government should unequivocally convey that they mean business and are committed to restoring GDP growth to seven-eight per cent.

Will JSPL reconsider its expansion strategy, given the problems in getting clearances, costlier land acquisition, etc?

We have at the moment several projects under advance stages of execution. We are committed to finish them at the earliest and get them into operation. As far as the new projects are concerned, we are evaluating the impact of recent developments and would decide on the way forward as soon as things stabilise. Having gone through recent experiences, we have become more circumspect in all new investments/ventures, focusing specifically on risk management.

Will JSPL consider investing abroad?

JSPL has already invested over a billion dollars in foreign ventures consisting of steel plants, mines and power plants. And, we would continue to do so as long as the opportunities are financially attractive and offer us assured returns. We expect our foreign ventures and exports to contribute up to 40 per cent of our Group’s revenue in the next three to four years.