Govt has done its bit; now it is for us in the private sector to do our bit: TV Narendran

“In many ways, a lot of what we have asked for has come in. Some long-term plans as well for a green economy. We also like the fact that there is a lot of thinking on urban planning for the long term future. So a lot of positives is our takeaway from the Budget,” Says TV Narendran, President, CII & CEO & MD, Tata Steel.

Did the Budget address the issues raised by CII?
A lot of what we have asked for as CII has been addressed in the Budget. First and foremost is the focus on infrastructure. In fact, that continues to be there and the expenditure is being enhanced by about 35%. We also talked about the need for a glide path towards the fiscal deficit that takes into consideration the need for recovery. That has also been addressed. We have also talked about encouraging domestic manufacturing and a lot of that has been addressed as well, including making sure a lot of the capital budget for defence is going to be spent on Indian manufacturing.

So in many ways, a lot of what we have asked for has come in. Some long-term plans as well for a green economy. We also like the fact that there is a lot of thinking on urban planning for the long term future. So I think a lot of positives is our takeaway.

This Budget has come in bang in the middle of global uncertainty. When it comes to liquidity ahead of RBI’s next meeting and of course inflation, which is at multi decade highs in Europe, America and is being red flagged in India. Is that a missed opportunity for some kind of inflation management by duty cuts or any other ways?
There are duty cuts in some areas but while investing in infrastructure is not going to solve the problems overnight, it is about helping the competitiveness of India and helping the supply side in India and investment in infrastructure also create jobs across the country because infrastructure is being built across the country. It is going to take care of a lot of workers who are somewhere between agriculture and high end manufacturing because construction employs a lot of people.

So while it does not fully address inflation, it addresses some of the concerns about incomes because the money that is being spent is going to flow to a lot of people who are going to be working in constructing and building these infrastructure projects. Some actions have been taken and also support for some of the other sectors that we have been talking about – the high contact sectors. The MSMEs in tourism and hospitality are getting some support.

The larger initiative is about digital infrastructure which is being created and financial inclusion is being attempted through multiple initiatives. While it is not specifically targeting inflation in the short term, it is addressing many of these issues which are fundamental for the reason inflation is where it is today.

Do you think the disinvestment target of Rs 65,000 crore, is conservative? This is not the time to step on the gas. We have already been wondering why markets are performing the way they were we did not see higher proceeds from disinvestment?
I think the disinvestment process takes a bit of time as we have seen it in the past and we have made a beginning and there have been two cases even last week. What is important is a lot of these assets up for disinvestment are in the core manufacturing sectors.

For instance, if I leave out Air India and if you look at a lot of the others, there is a lot of potential because a lot of these assets have been created, capital has been spent but not being put to productive use. The private sector can come in and get more out of this capital that has been invested and unlock more value, giving money to the government which it can spend on education, health and infrastructure. So capital will flow to the right hands for the right reasons, assets will flow to the right hands for the right reasons and hopefully we will have a more productive economy.

The top three words in the budget speech were development, invest and infrastructure. A lot of it is going to be long term for job creation or for battling inflation, batting the pressure on the wallet?
Where do jobs come from? They can only come from the government or from the private sector. Private sector investment as the finance minister herself said, needs to be crowded in with public sector investment and that is what they have been doing. I do not think we should expect significant disruption in every Budget. We should define a course, keep that course and improve on execution, because as we have seen in the last few years, the delivery is still a bit short of the promise. But at least the direction is right.

So we should focus on getting the execution, spending the money that is being kept aside and that will create jobs and investment. The best way to create jobs is to have both government investment and private sector investment and I think we are seeing private sector investment coming back. I am positive about it. We need to create jobs and those jobs can only be created by the private sector in addition to what can be created by the government. We cannot keep looking at the government to create jobs. The private sector needs to create jobs.

So are all of you in the private sector going to do that? If the government is going to hike its capex by 35%. it is now all of your turn?
Yes, absolutely. The ball is with us in some sense and what we saw from our members in the national council was also that people are going to be investing and hiring. Some sectors certainly need help which is the high contact sectors, some of the MSMEs need help but a lot of our members have been positive even before the third wave of the pandemic. The third wave of the pandemic seems to be receding fast and we hope to have a good year next year.

The 30% tax has been announced for digital or virtual assets. Do you think it is going to do for discretionary income the way the gen Zs and the millennials have been investing?
We have seen two initiatives; one is the announcement that RBI will come up with a digital rupee during this year and that is a positive thing and it will have a significant impact. The central banks across the world are grappling with the consequences of this. The other part is the CII view has also been that some of these cryptocurrencies and digital assets need to be treated like securities, like everything else because it is in some sense a speculative investment and we need to treat it like that.

The government is looking at it from that point of view. It will probably bring a little bit more and calm the sentiments a bit so that people treat it like all other securities. If it is an investment, it is an investment for the long term rather than a speculative investment for daily rollercoaster rides.

There is of course an exuberance when we look at the infrastructure stocks, steel stocks and banking stocks that is obviously because of the higher capex outlay for infrastructure – the seven engines of growth. Can we expect significant capacity additions at a time when prices are also volatile? Once again will India Inc do its bit, the markets are expecting you to?
Absolutely. I think we will. Fundamentally private sector investment comes in when demand grows and it is there now; profitability improves and that is also there now for many sectors; when balance sheets are deleveraged and it has happened over the last year for many capital intensive sectors. So all the conditions are right and we just need the government to keep the policies stable and continue to spend on infrastructure. The government has done its bit and it is for us in the private sector now to do our bit.