We need to improve the investment climate
Chanda Kochhar, MD and CEO ICICI Bank, says the approach towards access to natural resources should be clarified
Chanda Kochhar, managing director and chief executive officer ICICI Bank.
Updated:
One important task is to get the existing capacities
working. For example, in the power sector we have a capacity of 230,000
megawatts (MW) but at least 10% or 23,000MW is not working or
operational because of raw material linkages and my rough calculation is
if we get this 23,000MW operating, we can add at least half a per cent
to India’s gross domestic product (GDP). It has a huge multiplier impact
because as this power becomes available, the cost of power comes down,
other industries which are shut today start working and so on.
Secondly, improve the investment climate and for that you
need to clarify the approach towards access to land, natural resources
and approach towards environmental clearances. If we bring clarity
there, we can improve investment climate in general.
Thirdly, government entities like the National Highways
Authority of India (NHAI) and state electricity boards (SEBs) can also
kick-start investments by just paying overdues to the private sector. If
all these overdues are paid, there will be about Rs.1
trillion that will go to the private sector, which will provide the
liquidity to start re-investing. Also, large public sector undertakings
(PSUs) are sitting on huge cash. The top- five PSUs are sitting on cash
of more than Rs.50,000
crore and they also have projects in the pipeline worth that. So, if
they use the cash to set up the projects, some amount of confidence can
go to the private sector as well.
We also need clarity on the path towards fiscal
consolidation and fiscal deficit management and also actions to make
sure we get there. The final thing would be to quickly bring to closure
clarity around GAAR (general anti-avoidance rules) because it has
introduced a lot of uncertainty. The government has announced that it
wants to bring clarity, but the final signing, sealing, delivery has not
yet happened. If we do that, it will send back a huge amount of
confidence to the investing community abroad to say that there is
certain clarity around the investment climate.
paritosh ranjan
PGDM 2sem
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