Want Continuance Of PM Modi’s Strategy For Economic Development And Job Creation: RC Bhargava, Chairman, Maruti Suzuki India
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There are various schools of thought on GDP Growth. While some say it is growing briskly, some are of the view that the growth has tapered off over the last few years. What is your view?
GDP growth rates a matter of fact. The growth rate in the last quarter was 7.6%, it has been going up for the last three quarters. So the direction in which it is going is apparent from the figures. Who says it has tapered off? It has not really tapered off. It is rising. And we are on the right course, I think you have to compare the (current) course with what was before 2014. And was that course the right course? The course which continuously led to tax evasion, generation of black money, siphoning off funds from the companies, stagnant growth rates for industry, growing corruption, etc., was that the right course? After 2014, there were serious attempts to change lots of things that were happening before 2014. So if you say the previous course was the right course (which involved) Corruption and Black Money, then, of course, the current course is not the right course. But if the previous course was not the right course and it is obvious to me it was not the right course then this is the right course because we are trying to get rid of tax evasion and make it more and more difficult for people to siphon money out of the company and reduce corruption by digital payments and direct transfer of banks benefits to the beneficiaries and GST (implementation) and DeMo and all these things. So I think the answer is pretty obvious and it doesn’t require much thought.
If I ask you to compare the governance of Modi vis-à-vis the previous one run by UPA, which one do you think is far better in terms of ease of doing business and industry prosperity?
I thought that is answered by what I said (in the first question). You can’t do business in a place where there is a continuous growth of corruption, black money and where companies are not developing and growing.
So do you admire our PM Modi who came out with those structural reforms?
I definitely want continuance of PM Modi’s strategy for economic development and creation of jobs by creating an environment that will make manufacturing in India globally competitive.
While some are of the view that coalition govt is important, others feel that a stable govt is more important. Which kind of government would you prefer?
Whether it is a single party or a coalition or whatever, the ultimate test of a government is what it does and not what constitutes the government. If a coalition government can also do the right things (such as) promote industrial growth, weed out corruption, have tax compliance, compliance with the laws, implement projects correctly and efficiently, then how does it matter whether it is a coalition or not. That most coalition governments don’t do that is a different matter. But in 1991, the reforms were made by a minority govt. There was no one who had an absolute majority in 1991. But the most important reforms till 2014 were made in 1991. The Narasimha Rao government made the reforms when he did not have a majority. So it is not whether you have a majority or a minority. There were times in the past when there was a huge majority in the government i.e. (having) more than 400 seats. But they did nothing. How many seats you have and how many seats you don’t have doesn’t necessarily determine what you do.
A lot of economists are claiming that one of the downsides of the current government is lack of job creation and rural distress. What measures would you recommend to the government for this?
If you have 65 years of a system where you did not promote industrial growth and policies were anti-industry and anti-manufacturing growth; if you have 60% of poor people in agriculture but the GDP coming from the rural areas may be at 14-15%, what do you get? The average GDP per capita is one-fourth of the rest. The policies in the state and the centre did not encourage manufacturing growth. So if you think that the 65 years of growing corruption, black money, tax evasion and all, and the attitude it creates in people, the way of doing work, the way of bureaucracy and all the other associated with corruption, if you think that can all change in 3-4years and everybody will start working in a different manner including industrialists and bureaucrats, it is not possible. People don’t change their habits that quickly. How many people have changed their way of thinking over the last few years? You can’t expect the government to perform if the people don’t do things. How many people follow the law today? Jobs will get created when manufacturing, industrial activity, and economic growth picks up which requires a lot of changes to happen partly in terms of government rules and regulations and processes. It is not right to blame the government for everything. Please look at yourselves. What do we do?
Your thoughts on agricultural crisis?
The agricultural crisis has been happening over the last 70 years. Agricultural productivity has been very low largely because of all the policies, including the need to get votes through short-term policies. For example, MSP is a short-term answer but the long-term answer is only to increase agricultural productivity. Of course, the price should be remunerative, but productivity must go up. Lesser people in rural areas must produce more. Only then can their incomes go up. If you are having a percentage contribution from rural areas, just 15%, then the population in rural areas should not be more than 15%.
Are you of the view that nothing is happening on these fronts?
It is not correct to say that nothing is happening. The subsidies in the rural areas are going to the poor people, which earlier was largely defalcated on the way to being distributed. I think Mr. Rajiv Gandhi said that 85% does not reach the beneficiaries. By making that through the Jan Dhan Bank accounts and direct transfer, a large section of poorer people are getting money. The agricultural marketing policy, some states have already revised them. For example, this marketing act, where everything had to be brought to the Mandi and the middleman was unnecessarily involved. Now, direct marketing is being allowed in several states. There are a lot more vested interests.
So it is a long process?
It is not a very short process. If we had done things right from the beginning, everything would have been very different. But if you do the wrong things for a long time, it becomes much more difficult to do the right things now. You have to undo the past and then start.
Do you think it is fair to compare India with China?
The comparison is only valid to the extent that in 1950, we were economically ahead of China. When India gained its independence in 1947 and we started developing, we were much ahead of China. Now we have fallen 10 times behind China almost, 10 years behind atleast. The political system in China is different than ours. So a lot of things which you can do in China in that political system, you can’t do in our political system. That makes a difference. For example, you saw how the infrastructure was created in Shanghai and Beijing, people were relocated (and) streets were widened, can you do it here? Try and widen the street in Chandni Chowk (in Delhi) and see what happens. Illegal encroachments on the road are difficult to remove here, not legal constructions. Periodically, we keep regularising illegal constructions. China doesn’t have to do that. China’s decision (by the govt) is made that this is what our policy will be. There is no discussion anywhere to block it. Our laws get blocked because either in the Lok Sabha or the Rajya Sabha or between the two, the law cannot be passed. The judiciary says no, the law is not correct. Take Aadhar (for example), if China introduces Aadhar, will there be this discussion going on in the Supreme Court on Aadhar? Chance hi nahi hain (There is no chance at all). China says (introduce) Aadhar and everybody has to (apply for) Aadhar. But in India, we have the rule of law and we have democracy so we have a different process.
As you are leading the country’s largest carmaker Maruti Suzuki, are you of the view that labour policies are not that industry-friendly?
The laws today don’t recognise the fact that industry and labour have to work together. What was true earlier on and what Karl Marx talked about is no longer valid in today’s world. Because you have a competitive world, if the company doesn’t do well, who suffers? How does the labour gets protected in terms of jobs, better emoluments, etc.? If the company goes bankrupt, in the old days the States would nationalise and protect them. If you produce something at twice market price, you can’t sell. So you will go bankrupt. Then what happens to your labour? Who will pay them? However rich the promoter may be, he can’t continue to pay the labour if the product doesn’t sell. So it is in the interest of the labour to ensure that the company remains competitive. But it is equally the responsibility of the management to ensure that such conditions are created where labour understands this and wants to do it because then if the company remains competitive (and) it does well, the labour should share the benefits of some of that growth also. So I am not saying labour reforms are not required but (it is) more about understanding what labour and management relations should be and how those relationships should be built. You can’t build relationships only by law. Law can only facilitate it not build it.
