New Delhi: Industry lobby group Confederation of Indian Industry (CII) has forecast that the Indian economy will grow 7.5-8% this year. The economy, she reckons, has the potential to create five million jobs a year. In an interview, Shobana Kamineni, the first woman president of CII, said getting more women into the labour workforce is a key priority area. To that end, she plans to start a parity index, similar to the Ease of Doing Business index.
Kamineni, who is also the executive vice-chairperson of Apollo Hospitals Enterprises Ltd, spoke about the impact of the recently passed ordinance on non-performing assets (NPAs) ordinance, which gives the Reserve Bank of India broader powers in bad loan resolution, CII’s role in tackling NPAs, job creation and related issues. Edited excerpts:
Job creation and growth revival are your key priorities. What do you see as the biggest hurdles?
First we need to open up credit offtake. Banks should not be shy (of lending). The bankruptcy code was in the long vision. But the short vision is the NPA ordinance. I don’t think it will be easy for the services sector, the IT sector to figure out how they are going to place people. The ongoing issues of rationalization in terms of their efficiency will also create tension in the system. On the one hand, companies are trying to become more efficient and we want to engage with them to create more capacities; with that we want more credit off-take. That is the virtuous cycle we are looking to see will happen.
...monsoon can be a hurdle. We desperately need a good monsoon. States like Tamil Nadu are reeling under pressure of (shortage of) water. Water is going to be a hurdle everywhere. Several states are working towards deleveraging the risk of water.
Peace and security is a bit of an issue, especially in some areas more than others. That’s something that needs to get resolved more because we have businesses there. If you see, a lot of the pharma industries have moved to the north-east because of the excise duty benefits. That needs to be a calm region. Other places need to be calm.
The global scenario is short-term. People understand that India is a big market. But, we have to make sure that we are able to show that this growth is happening in a faster manner.
What is CII doing to address the role of its members in the NPA problem?
You cannot label an industry bad because they have NPAs. Some of the best and ethically run firms have NPAs and it’s largely been because of slow decision making. Everybody realizes that. Even the banks do. But when you start adding interest upon interest, it balloons. Our viewpoint is we have to help solve that problem of seeing that it doesn’t recur in the future and if there is a resolution or path towards that, the bankruptcy code is a big one. CII was instrumental in actually asking for such a thing.
But, we are not a going to regulate a company, we don’t understand the circumstances, we are not into micromanaging them. We have a very strict code of governance, a voluntary code of conduct. We encourage people to be more compliant. Governance laws of India also are quite strict.
What will it take to revive private sector investment in India?
Good monsoon will increase consumption. More construction activities of the 20 million homes, will lead to more jobs, which in turn will help people to up spending money, they won’t be so cautious about saving.
From the services side, middle class is consuming to some extent with lower interest rates. We cannot expect the industry to add new capacity and borrow at this current interest rate. They need to come down. We need to have more uniform tax.
You said that India can create five million jobs each year. How can more jobs be created?
Rule on contract labour, equalization and four labour codes are crucial. The fixed-term employment is important for us. There will be a new future of jobs wherein people might do two to three jobs.
Construction sector will have a huge contribution towards job creation. Healthcare, tourism, retail, logistics, e-commerce, social media and content creation will be other areas.
Where will there be job losses?
Wherever you can see, automation can take over and bring in ruthless efficiency. Clearly in some of the high-end manufacturing areas, we will see jobs will change.
Will five million jobs per year be enough for India?
Five million is a great start. First realize there is no clean data. This was a simple data point in terms of extra jobs created. Today, we have 400 million jobs in the unorganized sector. There are 22 odd million in the formal sector. Every year, 3.7 million were added. First you create five million jobs; these are job seekers who come into the market. That will lead housewives and students to believe that it is a good economy and motivate them to join the workforce.
You are the first women president of CII. There are reports suggesting stagnating female labour force participation in India. What will you do to get more women into the workforce?
According to McKinsey parity index, India’s (women participation rate) is 1:9, close to Saudi Arabia. The world average is 1:3.5. So, what will it take to move the needle to 7? Let’s start a parity project based on this. We will create a parity index, like what we are doing under the Ease of Doing Business. We can start an index that talks about parity and gets states to start competing. It is a state area, and it varies from state to state. For instance, in the north-eastern states like Manipur, the parity is almost as good as Europe. As expected one certain belt brings our average down badly. The parity index is big for us.
Any state level labour reforms that you think the government needs to look at?
Fixed-term employment is a big one. I am glad Maharashtra has done this. We are working with them on simplifying the labour laws.
What is the expected impact of GST (goods and services tax) rollout on corporate India s? How long will the transition period be, once implemented?
The better corporates that have already engaged and are working with computerized systems and are working well with VAT (value-added tax) will absorb and finish it in a quarter because what they were looking for is government clarity. Most companies have engaged experts from government.
According to you, is government working at the right pace, in the right direction?
This is a government that is not afraid to take hard decisions. It is pro-market, pro-poor, all these are important. It doesn’t mean corporate India should not be pro-poor—that’s what I see as being more inclusive. Corporate India is behind them fully. No corporate came up and said that demonetization is horrible.