The Hindu Business Line
News story by G Balachandar
Country has made solid improvements in ease-of-doing-business, says Arun Kumar
Chennai, February 21
Global accounting firm KPMG is in its 25th year of operations in India. With close to 20,000 employees in the country, it is eyeing significant growth in the coming years under Arun Kumar, who took charge as Chairman and CEO of KPMG India, a year ago. Kumar, who had served as Assistant Secretary of Commerce for Global Markets and Director General of the US and Foreign Commercial Service in the Obama Administration, spoke to BusinessLine recently on the economy and other areas. Excerpts:
What were some of the important measures announced in the Budget?
There has been a good focus on infrastructure. The focus on urbanisation, smart cities, transportation (railways and highways) — all are really important for the growth trajectory of a country. China grew by investing a lot in top-notch infrastructure. I see the infrastructure investment as an important one — job creating and really contributing to ease-of-doing-business, which has been the focus of the government.
The second area is the farm sector. Agriculture has been growing at 2.1 per cent and, clearly, if you can lift that by a couple of percentage points, it will have a big impact on the overall growth. Since agri income is important, measures to boost farm income and enhanced credit availability are important measures.
Do you see the revival of the private investment cycle in the near term?
The Economic Survey has suggested that the cycle will begin to turn. As that is well-known, there has been an over-capacity issue in the private sector. Also, there has been reluctance among banks to lend, which is critical to private-sector investment. However, the over-capacity issue is beginning to ease in some segments. If you see this year, an upswing is being witnessed in sectors such as steel. Then, with the addressing of the twin-balance-sheet problems, we should hopefully see the easing of credit to support private-sector investment.
Do you see more job creation happening in the non-traditional segments?
Actually, investment in infrastructure will create jobs. Also, making the country more investor-friendly will help create jobs — for example, focus on ease-of-doing-business, which will attract both domestic and foreign investments and help generate jobs. Another area that has been mentioned is exports. The more the exports can be increased, the higher the number jobs that can be generated. Various steps have been outlined to boost exports. So these are three broad areas to create jobs.
Meanwhile, there are some interesting non-traditional areas where companies such as Uber and Ola are creating a new form of employment. We will see more and more of such types. In services, companies like OYO (Rooms) also create jobs. I definitely see a new source of job creation. Also, I think tourism is another area that has tremendous potential for job creation across the country.
Is India showing improvements in ease-of-doing-business?
I was at the dinner meeting hosted by Prime Minister Modi for global CEOs at Davos. In what they said publicly and in conversation outside, those who have been in India for a long time stated they do actually see solid improvement on ground. Would they like to see more improvements in ease-of-doing-business? Yes, absolutely. But people are encouraged by the progress they see. Of course, it varies from State to State. I think there are a lot of simple things, like getting a SIM card, that need to be simplified. The PM also talked about ease of living. So things need to be simplified not just for businesses, but also for the common man.
The Insolvency and Bankruptcy code is really a major step forward. May be in a year or two, we should get to see the results of that both in terms of restructuring and turnaround of enterprises, as also in terms of making it easier for the banks.
What should be the key focus areas to drive higher economic growth?
I think continued focus on ease-of-doing business should be a major area. Further, easing of harder issues such as labour laws will make a huge difference. Boosting agriculture productivity will be another major area. One of the positive signs is that leaders at the State level are competing with each other and trying to show people how they are able to attract jobs. Many of them are thinking big and showing a lot of vision for their States. I think that is one of the real bright spots. There are several Chief Ministers who are doing a lot on economic development. I really see tangible benefits due to their efforts. I see decisiveness and I see more forward-thinking. If all States in the country follow suit, it will make a huge difference.
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