New Delhi: India is on the move like never before. The reform process started with the liberalisation of the economy in the 1991 is bearing fruit today. And the most significant consequence has been the emergence of a new face of entrepreneurship. At CNN-IBN, we call this the birth of a Young India.
Sixteen days before the Union Finance Minister rise to present the Union Budget 2007, things have never looked better. The economy is growing in about 9 per cent, the industry is scorching at a growth rate of about 11 per cent, and in the second week of February, corporate India has sealed up deals in excess of $25 billion.
In that context, CNN-IBN's Shirin Bhan spoke to a large group of representatives from the Corporate India's GenNext on CNN-IBN’s Special Show Rising India: Corporate India's Generation Next to find out where they see the economic blueprint of India in the next the couple of years. It was the largest congregation of corporate leaders in Indian television history.
Is disinvestment as reform is over-rated?
Rajiv Memani of E&Y says "what has happened is on a high tide, all boats are up. So, everyone is being very positive and optimistic."
"There are two aspects of disinvestment," he points out. "One is about capital mobilisation. We have partly achieved this through the IPO process. The other is about creating efficiency. On both aspects, today is the best time to disinvest if you want to create efficiency in the economy. For example, if you were to put SAIL today, think of the kind of interest that you get and the growth that you will get."
But is there any specific sector that the government should continue to hold?
"There are some businesses, especially in the very highly regulated sectors. For instance, I would say that there is no need to disinvest in Life Insurance Corporation today. ONGC, definitely, because these are national assets and the government is going out and acquiring for oil security and everything else. But if you look at Balco, for example, see the level of investment that has been created. You have created an enterprise, you have created an entrepreneur and you have created a globally successful company out of that," Rajiv says,
The Indian industry hopes to hear more easing on controls this year as far as the Foreign Direct Investment regime is concerned. We have seen it happen as far as the telecom sector is concerned. There has been the talk of a national security Bill coming in, which would actually cap FDI in several sectors, including roads, ports, telecom so on and so forth. Are the national security concerns on hiking FDI within particular sectors exaggerated while the government is trying to sell the argument or not sell the argument of allowing more foreign direct investment?
In an instant vote, 58 per cent of the congregation said "yes, security concerns are exaggerated" while 35 per cent voted "no" and 6 per cent voted "can't say".
"FDI, by and large, has become a great ploy for Indian entrepreneurs to raise the valuation stake," says one of the participants. "There is nothing wrong with that. But at some stage, you have to open up. If you look at retail and some of the other sectors like insurance, I can't see why are you not opening up. Secondly, just look at this. You don't open print, but Internet is open," he points out.
Their is double-speak on this within the corporate India as well. The fact of the matter is if you look at retail, for example, the domestic lobby doesn't want foreign direct investment to come in.
Shivinder calls it "a vested interest on the part of companies which are opposing."
"I think there are some sectors which should not be opened up for FDI. But why is health insurance not opening up? I don't see any reason why retail should not get opened up. I don't think it's going to kill the smaller mom-and-pop shops. If you feel it is, make a regulation to begin with large retail formats. Even in areas where there are concerns for killing Indian entrepreneurship, you can come out with structures and policies that can address that," he argues.
How much of the argument against FDI is nationalism or protectionism masquerading as security concerns?
Rajiv Bajaj of Bajaj Auto agrees that most of the argument against FDI is nationalism or protectionism. "Except for some sector-specific and maybe some country-specific issues, I think the rest is exaggerated."
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