New Delhi: Prime Minister Narendra Modi on Friday said his government has corrected past weaknesses of the economy, and urged industrialists to “invest boldly", promising protection against wrong actions in genuine commercial failures.
“I want to assure the banking and corporate world that we have been able to overcome weaknesses in the system to a large extent. And so they should now take decisions fearlessly, invest boldly and spend undauntedly," Modi told the gathering at an event to celebrate the centenary of industry lobby Assocham.
Echoing Modi, finance minister Nirmala Sitharaman also urged India Inc to come out of its mood of “self-doubt" and unleash the animal spirits, as the steps taken post-budget have started showing some results on the ground.
Referring to the current economic downturn, Modi said he was aware of the discussions surrounding the state of the economy. “I don’t challenge them. Within those discussions, we have to remember that during the previous government, GDP growth in one quarter had fallen to 3.5%, CPI inflation had touched 9.4% and fiscal deficit had breached 5.6% of GDP. There were ups and downs in the economy earlier, too. Our country has the capability to come out stronger from such situations and it will," he added.
The economy had decelerated to a six-and-half-year low of 4.5% in the September quarter, owing to a sharp slowdown in consumption demand.
Assuring the industry of further action to remove criminal provisions in the Companies Act, Modi said business failure is not a crime. “Failure of companies is not always because of financial mismanagement. Only (those) who have risk-taking capacity can lead the country and society," he added.
Anil Agarwal, executive chairman, Vedanta Resources Ltd, said in an interview that he welcomed Modi’s signal for further decriminalization of business failures. “We are not people with swords. If you frighten us, we will flee. We are into business and ups and downs will be there. The less the bureaucracy, the better it is for us," he added.
A panel headed by Injeti Srinivas, secretary in the corporate affairs ministry, has finalized recommendations to decriminalize over 40 violations under the Companies Act and rationalize penalty provisions to make the regulatory regime more investment-friendly. The panel is likely to recommend that several offences be classified as civil wrongs, not warranting jail term, besides proposing a liberal penalty regime for small businesses.
Taking on the opposition, Modi said his government has been accused of being an agent for industrialists. “We are agent of the future of 130 crore people," he said.
“Five-six years ago, the economy was moving towards disaster. We have tried to stymie it and bring discipline. We have made structural changes. A strong foundation has been laid for a $5-trillion economy."