India will not get to 7-8 per cent growth levels without the corporate sector being a full partner in the government’s efforts. It is fair to say they (private sector) have not, until now, met with expectations, Suman Bery, Vice-Chairman of NITI Aayog, said on Thursday.
Speaking during a fireside chat in the CII National Conference on Responsive Supply Chain for Indian Manufacturing, Bery rued the fact that the private sector had not been investing in R&D or making investments when the main objective of the 2019 corporate tax rate cut was to make resources available to them for this purpose.
“Unfortunately, until now we have not seen proof of that (making increased investment in R&D or other investments). We can’t force the private sector. There is disappointment that in the fastest growing economy in the world (that India is), members of CII, etc are still sitting on their hands, citing threat from China,” Bery said.
India vs China
He noted that India ‘s corporate sector seems to be comfortable at operating on a sub-optimal scale. Bery underscored the need for them to scale up on the lines of China.
“We are now a $4-trillion economy. There are both upsides and downsides to where we are now. The upside is we have a strong track record and downside is both internationally and domestically, getting momentum for reform is much harder now than when you are not doing so well. The political challenge for us really is to persuade people that this is no time to relax,” he added.
Bery’s critique of the private sector’s underperformance gains significance as it follows Chief Economic Advisor Anantha Nageswaran’s rebuke over poor employee compensation, which he linked to a consumption slowdown despite corporate profits quadrupling in the last 3-4 years.
Bery also said that India will not be fully competitive unless the country can attract MSMEs from other countries. “CII has a role, FTAs have a role in this. Attracting foreign MSMEs also depends on a vibrant relationship between domestic MSMEs and large-scale corporates to which they contribute,” he added.
He also noted that there is “terrific home bias” on part of domestic large-scale manufacturers. “We have got to chip away at that,” he added.