Videocon Group managing director and Rajya Sabha MP Rajkumar Dhoot took over as Assocham (Associated Chambers of Commerce and Industry of India) president today at a time when the global and domestic economic situation has not been something to be upbeat about.
In an interview with Shaikh Zoaib Saleem, he denies that the chamber has lost in the race with other chambers. He says the government is lukewarm to propel industrial growth and asked it target subsidies to rein in fiscal deficit in the Budget.
Edited interview:
Q. Assocham often becomes a target of critics who say that it has not developed with time and lagged behind other chambers of commerce. Do you agree with the criticism?
Ans. I do not accept that point. At least in the last three years, the growth recorded by Assocham has been remarkable. But, it is a free world, people can say that. But Finance Minister Pranab Mukherjee as well as former finance minister P Chidambaram have praised Assocham repeatedly. Also, no other chamber has the kind of membership that Assocham has. Yes, we had a weakness in terms of infrastructure, but in another two years, that will also get solved.
Q. The Supreme Court order to cancel 2G spectrum allocation has changed the scenario in the telecom industry as investments in the sector have virtually come to a halt with international players even threatening to withdraw from Indian market. What is the chamber view on the issue?
Ans. We at Assocham have not yet taken a stand on this issue. We can discuss this once I take over as the president.
Q. But even Videocon has also faced some cancellations?
Ans. I am speaking here as the president-elect of Assocham. So, it would be improper for me to speak on issues pertaining to a single company.
Q. Industrial production in the country has not been impressive in the country for quite some time now. How can the situation be improved along with providing a booster to exports?
Ans. The situation is bad all over the globe. So, I don’t think the exports can be improved very much as the demand there is low. But, we can boost the domestic industry. Also, there is low new investment, hence the production is going down. Moreover, the prices of raw materials have gone up and that too we are importing. That has impacted the viability of the industry. The government has been lukewarm in responding to the situation.
Q. While reforms have not taken place, even the much expected GST is not likely to see the light of day this year. So, what are you expecting from the budget now?
Ans. We have asked for reducing central sales tax to 1% from the existing 2%. The finance minister agreed to do that last year itself, but due to the fiscal constraints it did not happen. Not much reforms have taken place in the last two years, and that is very unfortunate. Direct Taxes Code must be introduced this year as it has been getting delayed not for economic reasons, but political reasons.
Q. With fiscal deficit looking grim and reforms moving slow, how can the government rein in the deficit amid chambers calling for retaining tax rates at present level in the Budget?
Ans. The finance minister is a very intelligent person, and he will definitely find out some way to control fiscal deficit. There are political compulsions to give food and fuel subsidies which are very high. We have also given some suggestions to the FM on controlling the subsidies. There are subsidies that can be avoided like the one given on diesel that is then used in luxurious automobiles, power generation, telecom towers, etc.
Q. Are you suggesting a differential pricing model for diesel?
Ans. No. I think the government can find out a method to impose some levy on diesel being used in some specific sectors like five star hotels, telecom towers and others. As per consumption, levy should be imposed and an expert committee should look into this. Basically, diesel subsidy is for the poor farmers, railways, public transport and other such uses. It should not be misused.
Q. The Food Security Bill has been criticised for subsidy outgo. What do you feel about food security?
Ans. We don’t say that there should not be food security. What we say is it should reach the target group. On any subsidy, people misusing it should be penalised. The public distribution system should be strengthened and its implementation with the use of unique identity (UID) numbers must me ensured.
