‘Temporary GST cut on consumer goods could help trigger demand’

 

Businesses and government should jointly tackle post-pandemic challenges such as worsening income inequality, said T V Narendran, Confederation of Indian Industries (CII) president and chief executive officer and managing director of Tata Steel Ltd. In an interview, Narendran also spoke about how a stimulus, including a temporary Goods and Services Tax (GST) rate cut on white goods could help rev up economic growth. Edited excerpts:

The industry obviously needs to be responsible and go beyond what it would anyway do for their employees. We have many members who operate in the poorest parts of the country. They are taking steps in terms of building schools, hospitals, providing infrastructure, water and other facilities. Many initiatives are already going on. Many of our members are already spending more than required under law as far as corporate social responsibility (CSR) is concerned. But can the industry alone solve these challenges? I am afraid, it cannot. The total CSR spending of all companies in the country is around ₹20,000 crore, which is a drop in the ocean if you want to solve these problems. There needs to be a way in which industry, government and the social sector come together not only to create jobs but also to do a lot of work in creating micro-entrepreneurs. We need to build skills so that employability improves. Multiple actions need to be taken beyond employment generation. I think the focus of the government in building infrastructure will provide a lot of opportunities to create jobs across the country. We need to have more equitable growth across regions and then of course you will have more inclusive growth as the benefits spread to people of these areas.

CII does a lot of things on affirmative action. It need not be mandated by law and I do not think that we are encouraging it to be mandated by law. I think we are encouraging our members to voluntarily do it and a lot of members are doing it. Affirmative action is a very important part of our initiatives. We have been acting on this for a fairly long period of time. At least ten years or more. It is not just employment, many members are engaged in vendor development too.

Technology will always bring some change. We need to reskill people. As some jobs disappear, new ones will come up. There were apprehensions about computerization 30 years ago, but now we have seen the IT sector coming up in a big way and has probably been the biggest job creator over the last 15-20 years. Many jobs are getting created in the technology space and we cannot have an industry today without IT investment. One big area for new jobs will be renewable energy and climate change-related investments.

These (relief measures for small businesses and vulnerable sections) are important parts of a stimulus but it (stimulus) should not be limited to just that. We have also asked if we can reduce GST on consumer goods by 2-3% for at least six months to trigger consumption. Smaller companies have struggled more than larger companies over the last year. That is why focus has been on industries that got impacted such as MSMEs, hospitality, travel and tourism to get consumption back. As far as bigger companies are concerned, reforms are always important because if you want to get the private sector investment cycle back, you need to continue improving the ease of doing business at both the Centre and state levels. One area where the government and industry need to work together is vaccination. We are also discussing how to get our members to commit to ensuring that they vaccinate all their employees and will also perhaps in a month or so, when vaccines are available, insist that anybody who comes to their offices or factories is vaccinated.

Reforms are never easy because multiple stakeholders need to be taken on board. I think if you look at the last 30 years, I do not think anybody doubts the need for reforms. It is the pace or extent of reforms that are discussed, not the direction. Healthy competition among states is important to attract investments, which is also happening. If you want to drive more reforms, it could be on land, labour. In labour, some actions have been taken. We need to ensure that it is deployed at the state level. As far as land is concerned, we need to make sure land is available for investors in a plug and play mode. These are the things that we need other than the simplification of taxation.

You need both. I think export markets look strong because most economies are spending their way out of the pandemic’s impact. At least the developed world is having a quicker recovery than one thought, particularly, the US and China. We should not lose the opportunity to leverage the growth that is happening in the EU, the US and China. Having said that, for most of the industry, revenue comes from the domestic market. So, we have to ensure that the domestic growth also comes back. Our recommendations are about how to get growth momentum back which we saw before the second covid wave—how can we help boost consumption, keep investment flow into infrastructure, do the vaccination and get the growth back. That is the focus for this year.

Source:https://www.livemint.com/news/temporary-gst-cut-on-consumer-goods-could-help-boost-demand-t-v-narendran-11624181320209.html

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