N Sankar, Chief Guest at the 86th Anniversary Celebrations of the Andhra Chamber of Commerce answering the questions after his keynote address. (l to r): C Nagendra Prasad, Vice President, G Sudhakar, Past President, Mrs Indira Dutt, President of the Chamber, N Sankar, CH Venkateswara Rao, Vice President.
The 86th anniversary of the Andhra Chamber of Commerce was celebrated on 17 August 2013. N Sankar was the chief guest. Former members of the Chamber were honoured on the occasion. Those present included president VL Indira Dutt and other office bearers C Nagendra Prasad and G Sudhakar.
In his address ‘India at the Crossroads - Again’, N Sankar appealed to both leading political formations in India to come together to ensure the country’s economic wellbeing, their differences notwithstanding.
"The Andhra Chamber is one of the leading Chambers of the city with a great history. It has contributed significantly to the development of Trade and Industry right from inception, and particularly after the emergence of the separate State of Andhra in 1952.
In the 1980s India took the first struggling steps towards some sort of relaxation of controls over the economy. But these reforms were at best partial, removing a few industries from licensing, allowing some automatic expansion in licensed capacity and removing some imports from controls. There was less suspicion of Private Sector activity, and permissions needed were more freely given.
So that was a crossroads in 1980 where we changed directions slightly.
In 1990-91 India was practically a bankrupt nation and literally had to hawk the national stock of gold to secure essential loans. The outstanding transformation of the Indian economy wrought by the team of Sri PV Narasimha Rao, incidentally a true son of the Andhra soil, and Dr Manmohan Singh is now a textbook study. They took a clear decision to swing the ship of State along the path of liberalisation and an open economy. The leading national Chambers were fully consulted, and more important their views taken seriously and acted upon quickly. Post liberalisation, the country’s GDP grew at an annual average growth rate of 6 to 8% in the 90s.
However, by the end of the 1990s India was again at the crossroads. The Asian financial crisis was threatening to engulf India also. The software industry in the Western world had also collapsed, and it was widely expected that the Indian economy would be affected. India generally came out of this crisis mostly unscathed, primarily because it was a relatively closed economy, and had continued to maintain capital controls on its currency.
While the 2008 global financial meltdown slowed GDP growth to a little over 6% in 2008-09, it bounced back from the next year to over 9% in 2010-11. However since then it has been a continuous downhill trend with 2012-13 closing at just over 5%, and 2013-14 predicted to be around the same.
And India is today again at the crossroads. With the global financial meltdown in 2008 the shine began to come off the India growth story, with a number of elements contributing – acute infrastructure constraints and strong global headwinds being at the top of the heap. While the strong stimulus measures adopted to combat the global meltdown in 2008 pushed the GDP up in the next couple of years, the deceleration since 2011-12 is significant. Also with the stimulus measures for stepping up consumption, and supply constraints both continuing, inflation has assumed menacing proportions.
With the RBI depending on pure monetary measures to fight inflation, there is further pressure on growth.
The dynamics of the global economic environment has undergone a major metamorphosis. The comments of the American Federal Reserve Chief on phased easing of stimulus measures has triggered a turmoil in the Foreign Exchange market, pushing the Rupee to a historic low of 62 against the Dollar.
But perhaps the worst problem is the complete change in the perception of India. From the golden days of ‘India shining’, external investor confidence in India has today slumped to a new low, driven by highly publicised scandals in different sectors, misguided taxation measures affecting foreign investors, etc.
On the other path, launching – and more important implementing – bold policy initiatives can again bring India back to the heights it enjoyed in the early part of the century.
The biggest asset that India has is its huge domestic consumption economy. As we speak, large manufacturing capacity investments are being made in different parts of the world, targeting domestic Indian consumption. India is increasingly becoming an import led economy. Equally important, our huge and ever increasing number of young, educated manpower can, apart from driving consumption help launch the service sector on a high trajectory.
However, to actualise all this, we need to implement policy reforms. Some of the reforms required are:
Improving infrastructure; clearing roadblocks to investment flow; stabilising external economic interactions; beefing up coordination between RBI and Government; closing the perception gap and bringing the eyes of the world back on India positively; reviving domestic markets and more importantly domestic manufacturing; streamlining project clearances, particularly related to environment; and bringing in a stable policy environment.
I make an appeal. There are only two Pan-India political parties that matter, and if we step back and take a macro view, their economic policies are almost similar. However, the realities of the democratic election process, ensure that when they are in the opposition, each party shoots down measures, which it had itself proposed or supported while in Government.
A section of the audience.
N Sankar presented with a memento by Mrs Indira Dutt.
Could not the senior members of these parties, in the interest of the nation, agree on a common economic agenda, which they would both tacitly support whether they are in power or in opposition? On all other issues they can continue to fight tooth and nail, but on matters of economic advancement, which will ultimately benefit the common man can they not come to a tacit understanding of cooperation?
With the national elections scheduled next year, this is a good time to push this concept of a common economic agenda among the political parties. I would urge all Chambers of Commerce, National and Regional, and other Trade bodies, to try and promulgate this idea in the appropriate circles.
We are again at a crossroads, and again the way ahead is not clear. But over the last few decades there have been several such occasions, and today we look back on those times and see that we moved on to the right path – perhaps by positive decision making, or perhaps by inaction and letting events overtake us.
Let us hope that once again in the future, we will look back at this period and say that one way or the other we had come on to the right path and taken steps to unleash the undoubted economic potential that India possesses, and launch her towards her undeniable place in the forefront of the world’s nations".
The tighter monetary measures put in place to combat inflation further contributed to deceleration of industrial growth. Continued external headwinds only compounded the woes. Industry grew by just over 3% in 2011-12 and 2012-13, and if we look at the manufacturing sector alone, it was even lower in these two years. The services sector, after posting double-digit growth for almost six years till 2010-11, slumped to 6.6% in 2012-13. Agricultural growth has also been weak in 2012-13 in the wake of lower than normal rainfall. |