Early GST implementation will improve GDP by 1.5-2%: Godrej
April, 23rd 2012
Soon after taking over as the President of Confederation of Indian Industry (CII), Adi Godrej, chairman of the Godrej Group is batting for early implementation of goods and service tax (GST) in India. In an exclusive interview to CNBC-TV18s special show 'The Appointment', Godrej said, "The reform opportunity in front of us, if properly implemented, can take us back to a 9-10% growth rate very easily. For example if you implement GST at an early date, you add 1.5-2% points to GDP growth."
GST is being delayed because of serious differences between the Centre and states. However, recently Bihar Finance Minister had assured that it is likely to be implemented by April next fiscal. Here is an edited transcript of his interview. Also watch the accompanying videos.
Q: I am not quite sure if I should be congratulating you because you come in at a time when people are writing off the Indian story. The distrust between corporate India and the government is huge. Decision-making seems to have been paralyzed and has been paralyzed for quite sometime now. I dont envy you at all.
A: The country is in a tough situation. The GDP has been decelerating, the reform programme has slowed down and governance issues are not being tackled as rapidly as they should, but the opportunity is also tremendous. So, the reform opportunity in front of us if properly implemented can take us back to a 9-10% growth rate very easily. For example if you implement GST at an early date, you add 1.5-2% points to GDP growth.
Q: I understand that you led a delegation that met the Prime Minister. What does he have to say? The last couple of meetings that have happened with the Prime Minister have been this ??" come on corporate India, dont keep giving us a hard time? Dont keep painting us with the same negative brush every time you talk to the media. Was there a difference in the manner in which the Prime Minister addresses the issue with you?
A: Yes, we had a very good meeting with the Prime Minister. We started the discussion by saying that we think the reality is not as bad as the perception.
Q: You said that you dont believe the reality is as bad as perception?
A: We dont think the reality is as bad as the perception and both the government and industry CII needs to see to it that we do not get overly negative. Perception is very important. At the same time the government must not make moves that are perceived to be negative. For example this retrospective amendment, GAAR etc. has been very badly perceived. I am not an expert, I not even sure whether it ought to be so badly perceived.
Clearly, it is not good for Indian economy and it is not good to attract investments into India. We should somehow find solutions to see that the perception does not get bad.
Q: How was the response from the Prime Minister?
A: The PM said it would be good if both the industry and government could work together. You cannot solve all the problems of the country in a twenty minute meeting but he was very positive on this front. Then of course we also mentioned to him about the various initiatives CII is taking in terms of inclusiveness, in terms of employability. CII is in unique position to add value in circumstances such as this.
We have about 65 offices across the country, and we have regional councils, state councils. There are a lot of states are doing very well, take agriculture for example. One of the reasons why we have the inflation problem is that agricultural supply is not keeping up with the agricultural demand. In some states we have a 10% growth rate in agriculture, benchmarking the best practices in India and spreading them around can help a lot.
We have done this very successfully in many areas in the South for example. This is what we are going to concentrate on this year ??" how to spread the best practices that prevail in India across India.