Growth forecast hinges on oil prices. Anything the government can do to remove this dependency?
The government can’t do much in the short run because the price is where it is. When oil prices came down, we saw an increase in taxes, creating an additional buffer for the government. Now is the time for the central government to collaborate with the states to cut taxes to reduce the price impact on the common man and businesses and reduce inflation. In the medium term, we will have to diversify our sources and streamline laws to make setting up renewable energy projects more attractive.
Will you insist on petroleum products in GST?
We believe both need to be done: Under the current framework, we would recommend that taxes be brought down and then move on to a situation where we include oil in the GST.
Any other measures the government can take to reduce the supply side pressure?
Keep up with the expansion of the economy and continue investing in real properties and infrastructure projects. Let us hope that the monsoon, which we expect to be normal, will bring down the food prices. Some non-farm sectors will need support.
When do you think the investment cycle will pick up pace given the rise in interest rates?
Apart from asking the private sector to let go of their animal spirits, the government has done a lot with the PLI (Production Linked Incentive) scheme, cut corporate tax rates and credit-enhancement schemes for MSMEs. Capacity utilization has increased to 70-72%. Usually, as soon as it is close to 80%, new investment starts. There are two issues – the uncertainty caused by the war and the disruption in the supply chain. We hope that the war will end soon and the supply disruptions will be resolved. It also allows India to be the hub for the world as businesses look to secure sourcing, not just near sourcing, and India could stand at the top of the list.
Do you still see the trust deficit between the industry and the government continuing?
We have seen a clear display of increased trust from the government. He has taken suggestions from the industry to de-crime and remove obsolete rules. There is a more frequent engagement between government and industry. The government recognizes the role of the private sector from the most senior position.