The Hindu : FICCI president to meet PM on long-term financing

Online edition of India's National Newspaper
Monday, Jan 19, 2004

National

National

FICCI president to meet PM on long-term financing

By Sushma Ramachandran

Y. K. Modi

NEW DELHI, JAN. 18 . In a bid to meet industry's needs for funds to create more manufacturing capacity, the new president of the Federation of Indian Chambers of Commerce and Industry (FICCI), Yogendra Kumar Modi, will soon meet the Prime Minister, Atal Bihari Vajpayee, to seek provision for long-term financing.

He told The Hindu that the buoyancy in the industrial sector had resulted in full utilisation of the existing capacity and there was now a need to expand the manufacturing facilities.

He said earlier long-term financing was available from institutions such as the ICICI, the IDBI and the IFCI but these are no longer providing such funds, urgently needed now. The industry would urge the Prime Minister to offer long-term funding through any financial institution with the caveat that strict action should be taken against wilful defaulters. "Let them be put in jail or have their companies taken over," he said, adding that the only consideration should be given in cases of global market fluctuations or where the company could be revived with deferring of repayment schedules.

In an interview shortly after taking over as president of the apex chamber, Mr. Modi said the feel-good factor in the economy was not confined to urban areas. "In fact, it is more in rural areas since [agricultural] production has risen by over 20 per cent and most of the demand for consumer goods is coming from rural areas," he said. While the feel-good factor was widespread, he conceded that much more needed to be done though this was "a good beginning."

The new chamber chief, who expects the economy to register over 7.5 per cent growth in the current fiscal, is confident that a minimum seven per cent growth in the GDP is likely to continue even in 2004-5. This is largely based on the assumption that the new government after the elections will follow the same policies with much more vigour. "Politicians seem to have realised the name of the game is economic growth, employment, and goods and services at cheaper prices, otherwise people won't vote for them. The people's expectations have rightly gone up," he said.

As for the recent "mini-budget" unveiled by the Government, he said it was unprecedented but welcomed the decisions taken to bring about cost efficiency. He did not agree that the policies should have waited for the formal budget presentation. Such decisions should be taken round the year, he suggested, instead of waiting for the budget to decide on issues, which can be implemented immediately. "I hope this becomes a precedent, every month they can do a mini-budget."

In this context, he looked forward to the abolition of the Foreign Investment Promotion Board (FIPB) and placing all foreign direct investment on the automatic route. "When foreign investment is being welcomed why have hurdles in between," he said.

In areas where more reforms are needed, he said industry was looking forward to flexibility in labour laws, implementation of value added tax (VAT) to make the country a single market and reduction in cost of power. He said credit availability to the small and medium enterprises was not adequate both in terms of interest rates and actual delivery. Interest rates remain high for small units ranging from 15 to 16 per cent while banks are not prepared to risk lending, despite being flush with funds.

He said FICCI plans to make employment generation in the manufacturing sector the theme for the year. The services sector was already generating employment but the problem was in the manufacturing sector. FICCI will also be carrying out a study on the informal sector to highlight problems as well give a focus to the tourism and agro-processing sectors.

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