KV Kamath, the non-executive chairman of Infosys and chairman of the ICICI bank, is optimistic that the Indian economy will see a turnaround soon. Commenting on the reforms process, he said that the animal spirit of the economy had not been slaughtered yet and can revive quickly.
Below is the edited transcript. Watch the full interview here.
- Q: The kind of power crisis we have seen is a glaring example of what is really ailing the economy right now. Do you think the government should really focus on bringing reforms that put the government in bind on whether or not to go forward?
A: I entirely agree. We should work on the reforms but the reform agenda in terms of big ticket reforms is not what is holding us back today. What is holding us back is the consumer side, the ability to afford. High interest rate is a very big challenge we have got. As far as the investment engine is concerned, interest is not the only issue there. Land clearances, environmental clearances, the comfort of doing a business (are important issues). And if that doesn’t happen, you hold back your investments. There has to be clarity in all these things or there has to be confidence within the industry that these things will be handled properly. This is what is required to boost that investment in the infrastructure and in manufacturing. In the past, these projects took a very long time to get implemented.
We are not talking of the implementation cycle. Around 12-18 months for manufacturing and 20-14 for infrastructure (will be enough). So we can accelerate things pretty quickly. We started talking of the mood...all this constitutes mood. If we start addressing these issues, the mood will start elevating. It is not as if the animal spirits have been slaughtered, the animal spirits have been still there and they will revive very quickly...
- Q: The prime minister also spoke about reviving the animal spirit, while we have seen a lot of talk really happening, what is that the government should do immediately to change that sentiment?
- A: I don’t think that there is something you can turn on or off. For example, I saw the mood changing to some extent when the GAAR was revisited and there would be clarity on that. I think the key mood changer; the medicine that the government should get is to provide clarity. So, it is not big ticket reforms, it is the clarity on the selected items (which is important).
- Q: Could you name a few of those items?
- A: The government should call the industry and talk to them about what are the 10 items they need clarity on. I think you need clarity on the land side, on the environment side, on the tax side. These would be the three headline issues. I don’t think anybody is talking of any concessions here. We need to articulate how the rules would be implemented. What is the way with which we can proceed our business, and that is what is required.