Nuclear Deal is Best Thing to have happened to India
Ratan Tata
As India teeters on the brink of a mid-term election with the nuclear deal in jeopardy, what impact could it have on India’s economy and its investment climate? That was the issue raised with the doyen of Indian industries and Chairman of Tata Sons, Ratan Tata.
Karan Thapar: As a Chairman of Tata Sons, do you welcome the prospect of a mid-term election, or do you fear its consequences for both growth and the investment climate?
Ratan Tata: I fear the uncertainty in the political environment which will certainly cause India to stumble, will cause the momentum of growth, which we have enjoyed, to pause if not reverse. And I for one have been extremely encouraged by what has happened in India – it started in the last regime and continued under Congress rule – of India moving forward and becoming an economic powerhouse.
Karan Thapar: And that could start unravelling with a mid-term election?
Ratan Tata: I believe it could if there is a mid-term election and I hope there is none.
Karan Thapar: What would happen to our target of 10 per cent growth? Would a mid-term election make it unattainable?
Ratan Tata: I wouldn’t want to comment on that but certainly it would make things difficult.
Karan Thapar: And if at the same time the nuclear deal were to unravel, what impact would that have both on FDI inflows into the country and the perception of India as a destination of investment?
Ratan Tata: The civil nuclear deal with the United States is in many ways the best possible thing that has happened to India in a long while. Apart from the fact that it enables India to go ahead on a much larger scale in the much needed area of power – of nuclear power which is clean power – it also takes away many of the dual use sanctions which have hurt India’s technological access. Over time this will give India a tremendously powerful position in the knowledge industry, in R&D, in high technology. I believe the benefits the nuclear deal will bring to the country will be enormous and I’m very very sorry that on various issues this is being beleaguered.
Karan Thapar: So if it doesn’t materialise this is a serious loss and set back for India?
Ratan Tata: I believe it’s a serious setback to India. I believe the only people happy to see this not happening are probably Pakistan and China.
Karan Thapar: And could it also have an impact on FDI inflows?
Ratan Tata: I think it could because I think there would be repercussions and there would be reactions. I really do believe that if it doesn’t happen, the only people who would be happy and benefited by it not happening will be the people of Pakistan and the people of China.
Karan Thapar: So if the deal doesn’t happen India would lose?
Ratan Tata: You might say that. Yes.
Karan Thapar: In May, speaking at the Confederation of Indian Industry, you said – “We’re not doing enough to reach this landmark of 10 per cent growth. India is not thinking big enough, not taking bold enough steps.” What are the steps you wanted the Government to take that have not been taken?
Ratan Tata: If you look at China and India, one glaring difference is that everything China has done has been enormously bold, in fact unbelievably bold, on the verge of seeming to be an overkill. (In contrast) We’re always growing in small increments and we’re always behind the curve because our demand exceeds supply and we’re always trying to catch up. And perhaps the time has come to go ahead of that curve and think really boldly.
Karan Thapar: Do we lack the confidence to be bold? Do we lack the vision? Or the courage?
Ratan Tata: I think its part of our culture. We’ve come from a planned economy which was suppose to balance supply and demand, and we just did what we had to do. I think that’s a culture of the past.
Karan Thapar: So we have to change our way of thinking?
Ratan Tata: Yes and we have to have the courage to be able to live with over supply because the planned economy and licence raj has created another mindset which is that you don’t live in an open, competitive world. You live in a world, which buffers and protects you.
Karan Thapar: And we have to live in competition and with competition?
Ratan Tata: And to be able to win in a competitive scenario. India is very entrepreneurial but somehow in the private sector we are afraid to do that. We are afraid of competition. We are afraid of foreign competition. We often don’t want to see this take place. And yet when I take the automobile industry, we have everybody internationally in India, and Indian carmakers are still surviving.
Karan Thapar: So conquer fear?
Ratan Tata: Conquer fear and have an urge to win.
Karan Thapar: Just a few days before you spoke at the CII, you also wrote a letter to the Prime Minister in your capacity as the Chairman of the Investment Commission, about the momentum of economic growth. You said – “It’s in danger of getting dissipated by delays and roadblocks for no apparent reasons. The net result is that the country is negatively impacted in investment and industrial growth and the opportunity of being globally competitive.” What response did you get from that letter?
Ratan Tata: I didn’t get a response other than an acknowledgment and an agreement that we would meet, but that meeting hasn’t taken place as yet. But the PM agreed to meet the Investment Commission on the issues relating to this letter, and he has undertaken to generate responses on the specific projects that I had listed.
Karan Thapar: You wrote to the PM in May as Chairman of the Investment Commission, and you did not get a response other than an acknowledgment. You got an acceptance to meet you, but four months have passed, and that meeting hasn’t happened either.
Ratan Tata: That’s been because all of us in the Investment Commission have also been traveling. I cannot say that it’s an issue that lies with the PM.
Karan Thapar: It’s not that the PM hasn’t responded with alacrity or seriousness.
Ratan Tata: No.
Karan Thapar: In that letter, you drew specific attention to hold ups in two areas – Insurance and banking. And you said that if restrictions were to be removed in these two fields, India could see perhaps see two or three billion dollars more of FDI. Now given that the government is publicly committed to reforms in these areas, when those reforms don’t materialise even after a lapse of two or three years, what message does it send out to the world?
Ratan Tata: It doesn’t send out a positive message. Sometimes these issues get overblown by foreign investors, but by and large, if India is to open up its economy, it will need funds from outside. India needs to be a more open financial economy. Therefore financial services, banking, insurance needs to be opened up. There can be constraints on market share that you put so our financial services don’t get dominated by foreign companies but, nevertheless, it needs to be opened up.
Karan Thapar: When it’s not opened up, despite the fact that the Finance Minister and the PM have committed themselves, then don’t investors both in India and abroad begin to doubt the word of the government?
Ratan Tata: Usually it is not government policy that leads to this kind of roadblock. Usually its vested interests in the country, sometimes in the private sector, sometimes from the public sector, that works its way behind the scene into policy, which blocks moving forward.
Karan Thapar: You mean vested interests in the form of industrialists who think they might suffer, actually work behind the scenes to impede some of the reforms the government is committed to, and as a result those reforms don’t happen?
Ratan Tata: It is not industrialists only, it may be individuals, it may be elements of the political environment, it may be the public sector.
Karan Thapar: But what sort of Government is it that makes a public commitment for reform, and allows backstairs-vested interest to hold its hand in restrain its action?
Ratan Tata: I think in fairness to our government, that kind of thing happens in varying degrees all over the world in all governments.
Karan Thapar: Does it happen more frequently in Indian than elsewhere?
Ratan Tata: Perhaps it does happen more frequently because India is in the process of transitioning, and it has to open up.
Karan Thapar: If the next few weeks or months turn out to be the last lap of the Manmohan Singh Government, how would Indian industry regard the three-years of UPA rule and in particular the UPA’s handling of the economy?
Ratan Tata: We have had a Prime Minister who in many ways has made this country proud. He’s an upright person of high ethical values. I believe he’s been respected all over the world for what he stands for. At the same time I think this Government has not been able to perform as it could have or should have performed.
Karan Thapar: Has the Government talked more about reform than it has delivered?
Ratan Tata: To some extent that could be true. It has been very vocal on reform. The Prime Minister has genuinely and seriously wanted to see the reform take place. I think the political system has not allowed delivery of that reform to take place.
Karan Thapar: Given the track record when it was in office between 1998 and 2004, how would you regard the possibility of another BJP-led government in power were there to be mid-term elections?
Ratan Tata: I wouldn’t be able to comment on that. Many of these reforms and much of the start of the economic boom happened towards the end of the BJP government.
Karan Thapar: So you have no reason to fear a BJP government. You hope that they would carry on the way they were.
Ratan Tata: Yes.
Karan Thapar: Mr Tata, in the middle of one of your answers in Part One you spoke about how the pressures and compulsions of coalition politics impose caution on the government and restrain them. And even a Prime Minister like Dr Manmohan Singh with the bold vision is unable to act boldly, why India has to go through mid-term elections. Would you therefore hope that we return with a single-party government?
Ratan Tata: If I leave mid-term election as an issue aside I really do wish we could go back to the days when we had stronger coalition or single-party in government or two-party system in the House where you really dealt with issues and you dealt with serious ideology rather than issues of opposition for the sake of opposing.
Karan Thapar: And that sort of boldness can only come if you have a strong government, and a strong government has to be a single party government preferably or at least a very strong coalition, not the sort of coalitions we are seeing at the moment.
Ratan Tata: Well, it has to be a strong majority.
Karan Thapar: A strong majority confident of itself and therefore a prime minister who has the confidence of that majority.
Ratan Tata: A strong government, a strong majority, confident of itself, committed to what it is doing and having one voice.
Karan Thapar: So to come back to the thought of boldness, which you emphasized so much in part one, am I right in believing that boldness if it is going to implement itself and work through in policy and vision has to come from the man at the top. When the Prime Minister is bold the country can be bold, when a Prime Minister is forced to be cautious and hesitant - everyone else becomes cautions and hesitant as well.
Ratan Tata: I think you are putting too much load on the Prime Minister. When the country has to be bold yes the government has to be bold yes the Prime Minister needs to lead the country in that way. But each of us also has to be bold in the businesses we run, in the investment decisions we make, in the marketing moves we do - we have to be bold we have to try to stretch the envelope we have to try to be the leaders not in the country alone but on the global basis.
Karan Thapar: So boldness has to come from within each of us.
Ratan Tata: Absolutely and it is wrong just to focus on the Government. Boldness has to be the thing that embodies the way we do our business.
Karan Thapar: That’s the message for the future - be bold.
Ratan Tata: Absolutely.
Karan Thapar: Be bold, be brave and you will be successful.
Ratan Tata: In fact internally I have coined a phrase in the group, “Think big, be bold - leader never falls. ”
Karan Thapar: Thank you for talking to us.
Source :- ibnlive.com
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