Corporate confidence is at an all time low. Investor sentiment is not very far behind inflation continues to rear its ugly head, the fiscal situation is not very comfortable and global volatility continues to queer the mix.
DD Rathi, the group executive president of Aditya Birla group, Ashok Wadhwa, the founder and group CEO of Ambit and Seshagiri Rao, the joint managing director of JSW, in an exclusive interview with CNBC-TV18’s Menaka Doshi put forth what India Inc wanted from Budget 2011.
Below is a verbatim transcript.
CNBC-TV18: Where do you see business confidence post the earnings season, prior to the budget itself, and post the Prime Minister’s address to the nation?
Rathi: Confidence level is definitely going down. Series of scams, lots of enquiries and it is getting exceedingly difficult to bring out projects. For example it is difficult to get allocation of natural resources, allocation of land and there is no clear policy on key issues. We keep worrying about how do we keep projects on time and within the budgeted cost. It all has brought down the confidence level.
The prime minister himself has said India’s image is getting tarnished because of these scams and the publicity that they are receiving. Governance has emerged as a big issue today with the corporates and in general. When I talk of budget, I talk of allied policies which are declared along with the budget.
Collectively, the focus has to be restoring the confidence of the business community and addressing governance issues which have emerged as a key issue today.
CNBC-TV18: From a scale of one to 10, where do you think business confidence currently lies?
Rathi: I didn’t come prepared for that. I can only say, if you compare the confidence, which we had six years back to today, it has definitely come down substantially.
CNBC-TV18: On a scale of one to 10, where would you rate business confidence as we go ahead?
Wadhwa: There has been a serious dilution in confidence level across the board. I don’t think I will attempt to say whether it is on the one side or the 10 side. I have never seen confidence dip so sharply in the many years that I have worked as a professional. I have never seen a transformation in business confidence of the type that I have seen in negative, in the last three months.
In November or December, there was little we could have done wrong. Consumption and aspiration of consumption was growing, investment mood was extremely buoyant and people were talking about expanding capacity. Eventually, it looked like we were getting our infrastructure projects right.
Suddenly, inflation is high, economic reforms has taken a backseat, politics has taken a front seat and we are aware of the lack of good governance which has affected our confidence level, not just in India, but in the biggest community, which in many ways is responsible for capital contribution in this country, the whole institutional investor community.
We have seen that lack of confidence translating into a real shortage of capital. How many companies were looking at going out and raising money in this next six months and how many people are now planning to do so? That comparison will tell us that there has been a sea change in economic environment and confidence over the last three months.
CNBC-TV18: Business confidence has sunk to an abysmal low. I am guessing you too don’t want to actually rate it between one and 10?
Rao: No. Business confidence level has definitely dipped in the last few months, but directionally is it so low that the corporates will not take any growth plans? I don’t agree with that. Directionally, it is in same direction. Many corporates are just looking at what is happening in the last three months and reviewing the situation. I don’t think it will dip to completely stop the growth.
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