The CMD of Kanoria Chemicals and Industries recently took over as the president of the Ficci. In an interview with Abhinav Kaul, he suggested that urgent steps are needed to bring India's growth story back on track. Excerpts:

The chatter for agriculture to grow at a higher rate went silent when the economy hit a purple patch. What steps should be taken to have renewed interest in the farm sector?

There is a need for a radical change in agriculture. As prosperity grows we have to feed more mouths as dietary patterns changes. There are studies to suggest that protein requirements of the Indian population are changing. There is a need to revisit the policies to feed this nation. For this, food security should be the agenda number one. We are trying to bring a paper on reforms in agriculture which would deal with modernisation of technologies employed, the type of extension services required and the methods adopted for surveying, irrigation and land use pattern. We are also working on how to match technologies with the needs of agriculture and digitalisation of selling of farm produce. There is an APMC Act (Agricultural Produce Market Committees), which requires you to sell your produce through a mandi manager, this results in the produce getting wasted if it doesn’t sell. Also there are subsidies on fertiliser, but what is happening is that farmers are buying fertiliser not because they are better nutrient for the soil but are cheap alternatives. The sector requires a full overhaul in policy making.

The government is reportedly considering certain incentives for the textile industry. Do you think this is a good idea?

First of all I am totally against sectoral sops. The fundamental structure sho­u­ld be such that you are competitive and if any sops are there, they should be of temporary nature. If you take the example of the Technology Upgradation Fund Scheme (TUFS), which provides lower interest rates for modernisation of textile mills, it is a very good scheme. It would make you strong in the long run and make you competitive. The government is, however, inconsistent about policies in the textile sector because it is driven by political considerations. For example, government banned exports of cotton yarn. Now, I think that was a totally wro­ng thing to do as the buyers in the foreign countries mo­ved on to the competition.

Recent manufacturing numbers have been depressing. Given the global slowdown, what steps should be taken to bring manufacturing on the high growth trajectory?

Number one is that interest rates should come down. Number two, issues of infrastructure and inputs required for manufacturing must be resolved. Coal pricing is important, but more than pricing, there has to be certainty about coal availability. Third, infrastructure funding will get a major thrust if we bring in pension and insurance reforms.

Six specific things you want the finance minister to do in the budget?

Stimulation for investment, reduction in MAT, increase in depreciation rates, pass-through of dividend distribution tax, introduction of investment allowance and bringing back the strategic divestment programme. The government cannot ignore the expenditure side of the budget and specially the subsidies on nitro-carbons. It must revisit the whole concept of subsidies. You cannot always look at the increase in income; reduction in expenditure must also be looked at. Now the problem is the government is trying to bring in the Food Security Bill, which will inflate the expenditure by around another Rs 1 lakh crore. The MGNREGA programme must also be revisited as it is resulting in labour shortage for the industry.

Export growth numbers have fallen to 6 per cent. Budget targets are way off the course. What do you suggest should be done about it?

In some ways, the lack of the finalisation of the WTO Doha round is also hurting us as we have to compete with the least developed nations such as Bangladesh, Mauritius and Nepal as they are allowed duty free access into the US and Europe. But, no matter what we do, if there is no demand globally nothing can be done. But the real agenda lies in competitiveness. You have to benchmark yourself against other countries. Also, the introduction of the goods and services tax will help exports. Today, we are exporting our taxes; we are not getting much refund. It will add at least 1.5 percentage points to GDP growth if GST comes into force.

The World Bank in its latest report has said that the world economy has entered a dangerous zone and countries including India must have a back-up plan. What should be this back-up plan?

India today has a tremendous demographic advantage, and it has got the internal demand. If we make the right policies to fuel the economy based on internal demand we would reduce our dependence on the rest of the world. It is imperative for us to find out why domestic investor is not investing. The back-up plan is to fuel the domestic demand. We have to make sure investment climate improves and also the money invested should get that extra mile out of it. In recent months, our outward FDI is catching-up with the inward FDI flows.

There is a general sense of gloom and doom. Do you think India Inc is adding to this distress?

India Inc is not adding to the gloom and doom. Even under rough circumstances India Inc is growing and will remain strong. Saving rates are still high, as long as these rates are good, there will be investment. Our saving rates are around 35 per cent and our incremental capital output ratio is 4.5-5 per cent. So, we will always have a growth rate of 7 per cent.