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Sinha urges industry to buy stake in India Inc

Syed Firdaus Ashraf in Bombay

"These kind of cycles come and go, but we must face the challenge with fighting spirit. It is as much of your responsibility as mine to see the economy recover." That was Finance Minister Yashwant Sinha, delivering a pep-talk to captains of industry at an encounter organised by the Confederation of Indian Industry.

Sinha, who has taken to this novel form of road shows, has already traversed Bangalore and Hyderabad, delivering his message of hope and optimism. After Bombay, Indore, Calcutta, Ahmedabad and Coimbatore. In fact, his tours have earned him the sobriquet 'evangelist FM', much to his chagrin.

"When somebody says the entire economy is not doing well, I don't agree. If that is the case how come industrialists are paying increased taxes?" he questioned those who spoke of low growth. Alternately chiding and cajoling, the FM was in his element today, and managed to keep the bluechip audience in good humour throughout, even when he was mildly rebuking some of them for congenital pessimism.

"There are some problems in industries like cement, capital goods and steel industry that have recorded poor growth. But at the same time there are other industries which are doing extremely well," he asserted.

"I am getting calls from abroad and friends of India are telling me we alone are an island of stability in a region of turmoil. Today, there are billions of dollars around the world and perhaps the time will come when India will become the most favoured nation for foreign investment," he added.

"This government believes in forging a partnership with trade and industry. It is not that the government can do it alone, it needs help from trade and industry. If we build bridges, we will be able to achieve the common target of developing the country as a whole."

Referring to the South-East Asian economies he said, "Many of us felt earlier that India has been left far behind in the race. But definitely things are improving today, when compared to other countries. I am a great believer that all countries must have their own growth model. In our country we must have our own model and pace of growth."

Talking about the achievements since Independence, he said the country has been built brick by brick so it is difficult to demolish the entire structure. He stressed that even during his tenure as finance minister in the seven-month-old Chandra Shekhar government, he always kept the country's debt commitment in spite of the fact that rating agencies had given India junk bond status.

He mentioned that no developing country can today talk of 5 to 6.5 per cent growth rate. However, he added that there was a problem. "But I feel nothing is lost if we work together with confidence, nothing will go wrong. "

Referring to a question from an industrialist, that they needed the tax benefits in recession-hit times, he said, "It is not possible to reduce the taxes because before doing that we need to look into the demand elasticity problem. But still I am determined to rationalise the duty structure."

Taking a defensive position about the government, the finance minister put across his word that the industrialists should not look at the government as an adversary. "I can also question you on who asked you to go in for over-capacity. But, I am not raising that point because we have to work together, as partners in a common enterprise.

"I am ready to give you all concessions. But tomorrow if there is a loss on the revenue side, you will be the first to ask me about the fiscal deficit. And, I assure you that we will keep the expenditure in control as mentioned in my Budget."

About agricultural production, he said this year the agriculture sector will grow only by four per cent. "I was in Punjab and the chief minister told me that the foodgrains production has increased by 2.5 million tonnes. Same is the case with Andhra Pradesh and Kerala whose chief ministers informed me about the agricultural growth in their states."

Stressing on the agriculture sector, he said there is a nexus between the agriculture and the industrial sector. If there is a demand in the rural areas then that leads to a boost in the industrial sector.

About taxation, he said so long as no one did anything inappropriate, like with the US president, it was all right, there was nothing to worry.

About introducing changes in the stock market, he said, "I am little worried about so much hope riding on buyback of shares. If nothing changes even after introducing buyback, what will happen?"

He felt the stock market was doing well on its own because of the 'feel good factor' in the boom period. He, however, stressed that the stock market takes into the consideration only the sentiments of the day and not the fundamentals of the economy.

"The fundamentals of the economy cannot change between 10 am and 2.30 pm," he emphasised. However, he quickly added that there was concern over the state of the primary market, and that he had discussed this with the Securities and Exchange Board of India.

Talking about public sector units, he assured that the PSU disinvestment will take place by the end of this month as scheduled, and he hoped that it would revive the stock market. He also announced that the disinvestment will cover not just the four PSUs announced in his Budget, but more units as well.

On the insurance sector, Sinha told the businessmen that privatisation was not the issue. The only question remaining was whether foreign companies should be allowed or not.

Making a passing reference to the still-born Tata airline proejct, he said he hoped the Tatas would reconsider their decision to withdraw from the project.