LAST fortnight, when a tired Inder Kumar Gujral along with his team of economic ministers and bureaucrats walked out of Delhi's Vigyan Bhavan after a marathon meeting with the country's top businessmen, they left Indian industry divided over exactly what and how much had been achieved in the five-hour conclave.
On the plus side: the prime minister agreed to personally review public sector projects to expedite investments in the core sectors of power, telecom, roads, oil and coal. The government also decided to set up two expert committees—an inter-ministerial group to review duty-free import of capital goods and a group under the Housing and Urban Affairs Ministry to study ways and means of increasing government expenditure in housing to boost demand for steel and cement. With industry complaining bitterly of harassment over environment and pollution issues, the government agreed to review environmental norms and evolve an "ecology and investment-friendly" forest policy. The Urban Land Ceiling Act will be amended and the anti-dumping cell in the Commerce Ministry beefed up and modernised.
On the minus side: as some industrialists who attended the meeting pointed out, it was all about setting up committees and promises to look into industry's grievances, which sound suspiciously like stock government responses. Of course, all the committees have been given deadlines to submit their reports, but.... One industrialist put it this way: "Mr Gujral was getting a reputation of being more of an external affairs minister than a prime minister, so he did this PR exercise."
Perhaps the most significant aspect about the meeting was that the industrialists pulled no punches. No one cozied up to the government and aggression was the name of the game. Finance Minister P. Chidambaram was possibly the worst grilled and, according to an industrialist who attended the meeting, lost his temper on at least two occasions. Clearly, Indian business' love affair with the minister, which began with his Union Budget, had hit rough weather.
The businessmen even fought among themselves. When former CII president Dhruv Sawhney attacked duty-free import of capital goods for the fertiliser and oil refinery sectors, Essar Group's Shashi Ruia and Reliance Industries president V. Bala-subramaniam reportedly accused the CII of trying to mislead the government.
Worried about the continuing industrial slowdown, the prime minister had called this meeting of industrialists from nine sectors: capital goods, automobiles, cement, chemicals and petrochemicals, electronics, leather, paper and paper products, steel and textiles. The three apex industrial chambers, FICCI, ASSOCHAM and CII, were represented. Before the conclave, the industrialists met Industries Minister Murasoli Maran in what was termed a 'preparatory meeting'.
At the Gujral-industrialists meeting, the government for the first time acknowledged that there was indeed a slowdown, but maintained that with extremely favourable macro-economic fundamentals—inflation at only four per cent, 13.5 per cent prime lending rate and a $30 billion foreign exchange reserve—there were plenty of measures that could be taken to turn the situation around. "The government will try to address the problems through both short-term and long-term measures," said Gujral. He told the industrialists that along with the expected busy season credit policy from the Reserve Bank of India, the government would announce several 'key decisions' between October 14 and 21 to improve the economic situation. The results of these proposed measures, Gujral was confident, would be tangible within five months.
And there were enough industrialists who were impressed. "There is a recession which will take its toll on the overall economic situation. We have to kickstart the economy now before it is too late," said ASSOCHAM president H.L. Somani. "Even if the fundamentals are strong, appropriate measures have to be taken to translate that into industrial and economic growth. This is what the government is trying by holding such meetings, and the best part of it is that the measures are time-bound."
On a similar note, FICCI president A.S. Kasliwal felt that the government's acknowledgement of an industrial slowdown indicated its interest in improving the situation. "It is clear that the meeting was a positive one, that there was cause for concern and that the situation could be rectified by measures well within the government's control. To begin with, the government should withdraw its decision to effect a five per cent cut in public expenditure," he said.
No doubt, in his first exclusive meeting with industry, the prime minister has indicated that the government is genuinely interested in solving industry's problems. Now he has to go ahead and do just that.
