New Delhi: Union Minister of Commerce and Industry, Piyush Goyal, has joined the chorus of voices slamming the private sector, criticising them for serving their own self-interests and not cooperating with the government.
Speaking at a post-budget conference organised by the Confederation of Indian Industry (CII) in Delhi Tuesday, Goyal took the assembled industry leaders to task for not cooperating with the government on free trade agreements (FTAs), reducing imports, or even in designing policies like the production-linked incentive scheme.
This criticism came soon after the Economic Survey, which was tabled in Parliament last Monday. Government officials in post-budget interviews have also slammed the private sector for various reasons.
While the Survey called out the private sector for not increasing investments enough following the 2019 corporate tax rate cuts, government officials have called out the behaviour of business leaders for only making demands for tax concessions and subsidies.
“It takes two hands to clap. You want access to international markets through FTAs. But whichever industry we speak to, they say that no (cheaper) imports should come into their sector. They say ‘give us protection’. So how can we do an FTA with the UK, with the EU?” Goyal said.
He further said that industry representatives ask the government to not provide prospective FTA partners with duty concessions, but want them to allow Indian businesses to export to them at zero duty.
“Is this how an FTA is done?” he asked. “Where is the cooperation from your end?”
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Choosing cheaper imports over Indian products
“When I appeal to all of you to buy products from each other instead of importing, then you say that ‘oh, but we are getting it 10 paise cheaper if I get it from another country, so I will import it’,” he remarked.
He further noted that the businessmen are not concerned about how much foreign exchange leaves the country in paying for these imports, since foreign exchange management is the domain of the Government of India and the Reserve Bank of India.
Goyal also castigated the assembled industry leaders for not participating in committees set up by the government to design policies.
“The PLI scheme came out of a SCALE (Steering Committee on Advancing Local value-add & Exports) committee,” he said. “I used to spend hours with that committee. I want to know, how many meetings did CII also attend?”
“Which industry partners of CII took part in SCALE committee actions or recommendations?” he added. “FICCI and Assocham didn’t ever come. So you tell me, how will things change?”
Other criticism
The Economic Survey 2023-24 noted that although the government had cut corporate tax rates in 2019, the private sector had not responded by increasing its investments by the required amount. Further, it also pointed to the “substantial and toxic” actions of the private sector that is eroding India’s productivity by encouraging unhealthy lifestyles.
Finance Secretary T.V. Somanathan told ThePrint in a post-Budget interview that he didn’t know why the private sector wasn’t investing.
“They never tell us the truth,” he said. “They are too polite with us. Typically, they tell us what they want from us rather than what they are actually doing. When we meet them, they always want tax cuts, they want subsidies.”
Somanathan said that this wasn’t a criticism and that “people should ask us what they want”, but added that he didn’t know why the private sector was not investing.
“They are all telling us that they are going to invest,” he said. “They keep telling us they are investing and that they are going to invest. I think they are… but I think private investment is picking up, maybe not as much as we would want it to.”
(Edited by Mannat Chugh)
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I am a firm believer in free-market economics. Lowering corporate taxes should have increased employment, but to my dismay, my IT-employed wife lost her job along with several of her colleagues.