CFOs say ease of doing business, credit support crucial to achieve the goal, ETCFO

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<p>$5 trillion economy: CFOs say ease of doing business, credit support crucial to achieve the goal</p>
$5 trillion economy: CFOs say ease of doing business, credit support crucial to achieve the goal

Prime Minister Narendra Modi has always been vocal about India’s current and future economic status and ranking upgrades in global fora including the last one at the BRICS summit in Johannesburg, South Africa, last month where he said soon India would become a $5 trillion economy.

Though he didn’t give any timeline, his Cabinet ministers have given different ones on separate occasions.

He has also said India will be a developed nation by 2047, in an interview with the news agency PTI, and with a high-profile event like the G20 Summit around the corner, more such statements deciphering India’s economic prowess can be expected.

ET CFO spoke to CFOs across industries to ascertain how a $5 trillion economy size can be achieved in two years from the current $3.5 trillion, considering that the country took 76 years since Independence to achieve the current size.

What CFOs want

The broad-based requirements, according to, the CFOs are a correct balance between fiscal support and discipline, providing skilled education, women’s participation in the formal workforce, modernisation of agriculture, healthcare support from the government, simplification of taxation, credit support to MSMEs, easing bureaucratic tangles, lesser regulatory compliance, among the others.

Pomila Jaspal, Director (Finance), ONGC says it’s very important to maintain fiscal discipline while deciding on economic stimulants for growth which otherwise can bring negative consequences.

“In a proactive move, the government has proposed a 33% increase in the capital expenditure target to Rs 10 lakh crore for this fiscal year. This amount accounts for 3.3% of the country’s economic output and aims to stimulate demand and consumption in the economy. However, it is crucial to strike a balance between stimulating economic recovery and maintaining fiscal discipline to avoid potential negative consequences on the overall economic health”, she told ET CFO in an exclusive interaction.

Exuding confidence that the Indian economy can maintain its position as one of the world’s fastest-growing major economies and achieve $5 trillion sooner and later, she also said addressing the issue of unemployment and underemployment is crucial, particularly in sectors that require higher skills and education.

The finance chief of the upstream crude oil major drew attention to issues in ease of doing business and tax systems.

“While India had made commendable efforts to enhance its ranking in the Ease of Doing Business index, hurdles in obtaining clearances impede businesses to operate efficiently. The Indian tax system is often seen as complex and uncertain. To attract both domestic and foreign investments, a vital step in implementing consistent and transparent tax reforms is essential to foster investor confidence”, Jaspal added.

Vedanta Group and mining major Hindustan Zinc Ltd CFO Sandeep Modi the natural resource sector has a lot of potential to contribute to this growth, and private investment in this sector is crucial.

<p><strong>Business reforms</strong></p>
Business reforms

Business reforms

“Ease of doing business reforms, such as single window clearances and regulated self-certification, will also attract more private investment. Household consumption will also play a major role in achieving this target. Finally, MSMEs need access to competitive credit lines and special interest rates to boost their growth”, he told ETCFO.

Arnab Roy, Zone CFO – Greater India & CFO, Schneider Electric India Pvt Ltd said emphasis should be given in the farm sector to raise yields through technology infusion, market access improvement, and distribution chain.

“Agriculture engages nearly 60% of our population but contributes less than 20% to GDP. To breathe a new life into this sector, we must usher structural reforms infused with technology, embrace contract farming, and establish a robust, organised market system, complemented by a modern food distribution chain and advanced technologies,” Roy said.

Urbanisation is emerging as a potent growth driver, holding the promise of increased investments and elevated per capita GDP through the modernisation of our cities. However, the translation of intent into action hinges on nurturing a more business-friendly environment. This transformation also necessitates more technocrats joining the government workforce, the CFO added while stressing elevating women’s participation workforce from the current 26%.

Vijaya Gupta, CFO of RHI Magnesita India Ltd, a global supplier of refractory products, systems, and solutions said, “To achieve the dream of a $5 trillion economy, there is a need to streamline the business landscape and a harmony between regulations and practice should be put into place. We also need to reduce bureaucratic tangles, and have a seamless digital approval system in place,”

She also endorsed Roy’s view that empowering women who constitute half of our workforce is required and incentives fostering their participation are a necessity. Gupta agreed with Jaspal’s statement that skill development is the cornerstone of development.

Education, a fundamental right, should be an avenue nurtured by government support, leading to a thriving hub of global expertise,” she pointed out.

Milind Wadekar, CFO, of Chalet Hotels Ltd, said, “The constantly evolving Direct and Indirect Tax landscape, coupled with retrospective amendments and complex tax compliances, pose significant hurdles on the road to India’s ambition of attaining a $5 trillion economy.”

He added that studies indicate that India has one of the highest compliance costs for businesses. To overcome these obstacles, policymakers must introduce stable and predictable tax frameworks that not only reduce the compliance burden but also promote ease of doing business, encourage investments, and foster economic growth

<p>Boost MSMEs</p><p><br></p>
Boost MSMEs

Boost MSMEs

Mayank Thatte, CFO, at Rupyy, the fintech arm of Autotech company CarDekho feels MSMEs are vital for India’s growth, but there are hurdles in their growth.

“Despite the government initiatives, enhancing MSMEs’ capacity and technology remains challenging and a major hurdle in achieving India’s $5 trillion economy goal is insufficient backing for MSMEs. Despite driving economic growth, these enterprises struggle with funding, limited capacity, and complex regulations. Scarce resources and technology access hinder their competitiveness. Many MSMEs struggle with affordable financing. India must simplify rules, ensure fair financing access, and promote MSME technological and capacity growth to overcome these barriers,” Thatte told ETCFO.

Kavita Shirvaikar, CFO & Wholetime Director, Patel Engineering Ltd said, one of the main hurdles can be the Rupee fluctuation for $5 trillion fluctuations.

“The biggest impact of a weakening rupee is on inflation, given India imports more than 80% of its crude oil, which is India’s biggest import.

While a weak rupee makes imports costlier, it has some benefits too. It makes our exporters more competitive in theory. But in a scenario of weak global demand and lingering volatility, exporters are not cheering the currency dip.

Surajit Chakrabartty, CFO of genome testing labs and diagnostic company MedGenome, said the biggest hurdle from the health industry perspective that could affect overall growth eventually, is the lack of a regulatory framework to govern genetic testing in India. The Government needs to ensure genetic tests are provided to the patients who need them. More awareness will lead to greater adoption and prevent the rising disease burden.

Chakrabartty sees healthcare accessibility as a major hurdle in Tier 2 & 3 markets. He cited a lack of collective research efforts while seeking government-led genome sequencing programs and population-wide genome sequencing initiatives in partnership with some of the private players for the right disease insights and help in better healthcare outcomes that will lower government healthcare costs.

Exports, exchange rate, trade

Mayank Gupta, CFO, CarDekho Group, an app-based listing platform for used and new cars says pushing exports, identifying sunrise sectors to nurture them into export oriented segments, predictable tax laws, optimal personal taxation slabs, upskilling young workforce need to taken care of en route to 5 trillion dollar size of the economy.

“We must continue expanding our presence in international markets by driving growth through exports by identifying a minimum of five sunrise sectors where India can assert its global leadership demands, improving the ease of doing business, consistent tax regulations and optimal personal taxation structures. All these will broaden our tax base, attracting both enterprises and accomplished individuals,” Gupta said.

Additionally, upskilling the young workforce to international standards is vital, he said.

Vijayaraghavan S, CFO, ProConnect Supply Chain Solutions Ltd, a logistics entity says “India’s growth is intricately tied to the global economy. While the volatility in exchange rates and trade imbalances warrant attention, stabilizing these aspects could contribute to our economic aspirations.

Adapting to changing trade scenarios, addressing challenges in sectors like agriculture and manufacturing will be crucial, he said.

Mehtab Singh Hans, CFO, FarMart, a marketing app for agriculture vendors says “Initially, securing fair access to cutting-edge technology and innovation across all facets of agriculture continues to be a major concern. A stable regulatory framework for the agri sector is also required. Additionally, having a good debtor resolution system for all organizations is necessary. In a high-interest environment, having access to capital isn’t always as simple”.

  • Published On Sep 5, 2023 at 02:38 PM IST

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