Bharti Enterprises Vice Chairman Rakesh Mittal is the third person from the Bharti family to head an industry group. Ten years ago, Sunil Mittal headed CII; brother Rajan Mittal took charge at competing group FICCI in 2010. For Rakesh Mittal, the agenda is set for the next one year to take forward the CII's role of shaping up economic policies that benefit its members and stakeholders. Edited excerpts of his interaction with Business Today after assuming office.
Business Today: The idea of industry groups was to work closely with the government to shape up policies. Over the years, we have seen a decline in the influence part of industry groups. What has been the overall influence of industry groups like CII in shaping up policies? How are you going to make CII more relevant?
Rakesh Mittal: CII has done tremendous work on policy advocacy - at the national level and state level. If we just look at the GST, which is a major reform, CII worked closely with the government. First, when it was being implemented but after it was implemented, then we created groups across the country to create awareness among the members. In the last 12-18 months, the rationalization of tariffs, product categories moving into the right tax slabs, simplifying the processes and the e-way bill, this is something we worked closely with the GST Council. CII continues to engage with the government on policy advocacy. CII is not a lobbyist. We look at what our members want, what are the sectoral demands, and that then gets presented to the government through our councils and committees. In a way, we act a bridge between the government and the industry. You can go on - power reforms. All the policymaking and policy advocacy, CII has been at the forefront. We just set up a task force on cleanliness in the national capital region. While the government is engaging with various stakeholders, we put up a task force. In fact, CII northern region is running an awareness campaign amongst its members where they talk to different stakeholders.
It's not only that we look at policy advocacy. This is something which is concerning the larger population. CII brings its members' expertise, brings consultants and start working on that.
BT: As the general election nears, do you think the reform agenda of the government will take a back seat?
Mittal: The first phase of the government was more at the macro-level. In the last year-and-a-half, there's more focus on micro, and that's going to continue. In 2014, that was the first year of the government, prime minister talked about Swachh Bharat. That's a macro-policy indicator. But there's so much work that has happened at the micro-level where the governments, private sector and NGOs have worked in ensuring that the scheme is pushed. Of course, pre-election year becomes a bit of a challenge.
My view is that there will be a lot of focus on the agri sector over the next one year. Farmers are in distress. Rural economy has suffered due to droughts and bad monsoons. It's only in the last four seasons, we have seen some good monsoon. Prior to that, that was a big issue.
And it's coming from the prime minister's vision of doubling the farmers' income. It's something where we all need to work together. It's not just the government and farmers; it's also imperative for the industry to bring their expertise. Two factors that will heavily work on making this possible. One is large-scale private investment. Until and unless that comes into agriculture, doubling farmers' income becomes a distant dream.
The farmer doesn't move from what they are doing under the MSP regime because they have a safety net. One bane of MSP has been that the farmers have not ventured out into high-value crops. Whoever has taken that risk has been rewarded. I can tell you farmers have moved from growing wheat and rice to banana plantation. Suddenly, their income levels have gone up to Rs 1.5-2 lakh per acre versus Rs 80,000. The farmer will not take the risk; this is where the private sector needs to come in. We need to have right policies in place.
I have been propagating that a comprehensive ranking of states on agriculture needs to come in. Currently, NITI Aayog has initiated something but there are only three parameters: land lease, water management and deforestation. To my mind, free power should be withdrawn. The subsidies that the state governments are spending on free power should be spent on giving them solar pumps or putting solar farms. In fact, solar energy can be a third crop for farmers. When we talk about doubling farmers' income, it's not only through farming activities. We should push farmers getting into animal husbandry. Worldwide, the non-farming income of the farmers is higher than income from crops.
Under the APMC act, I have been pushing that the farmers should be given freedom to sell perishable produce directly to food processing companies, aggregators and retailers. Changing the entire APMC is a nightmare. It doesn't happen. If you see the income of the state government, around 5 percent will be fruits and vegetables. Ninety-five percent is staple. I am saying don't touch that. It reduces wastages, farmers get right payments. Therefore, long lease of agriculture land is important. Punjab, Rajasthan, Haryana, and Madhya Pradesh have already done that.
I also believe that the front-end retail is a catalyst for doubling farmers' income because the moment you have a cold chain right at the retail shelf, you need to build the back-end cold chain which has not been built so far. You have an outstanding supply chain for milk, and by the way, milk is not regulated. A dairy farmer can sell directly to anyone. That's exactly we are talking about.
There are many moving parts on doubling farmers' income. The government has taken this seriously. We need to work closely with the government, particularly with the state governments, to make policy changes.
BT: The investment cycle is down for quite some time. RBI has also taken a hawkish stance on interest rates. What's your understanding of the investment cycle?
Mittal: We are seeing uptrend in the global economy. The GDP of the developed economies is moving up. India was 6.7 per cent in March 2018. IMF forecast says that the next year we are looking at anywhere between 7.3 and 7.7 per cent. That's a positive trend. There has been 20-30 per cent of unutilized capacity in some sectors because there was lack of demand on account of bad monsoon, demonetization and GST. Thankfully, all of this is behind us.
If I see the auto sector - four-wheelers, SUVs, two-wheelers, they are all growing month-on-month. All major auto companies are blocking their steel capacity for the next three years. The cement is doing well on the back of infrastructure spending from the government. FMCG is doing well. There are other sectors which are struggling. As we see consumer demand going up, there will be pressure on investment to expand capacities. It will start to happen in 2018/19. Few sectors will be doing it quickly, and some sectors will start doing it in the phased manner.
BT: Since you are associated with the largest the largest telecom provider in the country, what's your view on the recent recommendations by TRAI on predatory pricing and telecom tariffs?
Mittal: As the CII president, I am not going to any telecom questions. But looking at the telecom sector, the only thing I can say is that there should be a level-playing field for all.