The Hindu Business Line : `FICCI favours use of forex reserves for infrastructural development'

THE new President of the Federation of Indian Chambers of Commerce and Industry (FICCI), Mr Onkar S. Kanwar, sees merit in the Planning Commission's proposal to use forex reserves for domestic infrastructural development.

"We support the thinking in the Planning Commission on this issue," Mr Kanwar told Business Line soon after taking over as the chamber President.

He maintained that such a move would not be inflationary and pointed out that a very small portion of the forex reserves of more than $ 120 billion is sought to be used for the development of infrastructure.

Commenting on the focus areas of the apex chamber during the forthcoming year, Mr Kanwar said that emphasising the need for developing infrastructural linkages between rural India and the mainstream highways would be one of the priority areas.

"The quality of infrastructure is one of the key determinants for investment flows into a country," he said.

The FICCI President also stressed on the need for improving the domestic manufacturing base if the country was keen to generate more employment.

Further, Mr Kanwar made a case for flexible labour laws, especially in sectors such as textiles that would face both challenges and opportunities with the imminent phase out of the multi-fibre agreement from January 1.

On corporate governance, Mr Kanwar held that such norms should not be imposed on companies through legislation.

"If companies have to exist in the current competitive environment, they will have to be transparent and adopt good governance practices," he said. Asked whether promoters of listed companies are generally comfortable with their holdings in the current environment, Mr Kanwar pointed out that people are always ready to support and vote for those promoters and managements that ensure "good dividend payouts, liquidity and appreciation for the company's shares."

The FICCI President also called for a revamp of procedures to ensure speedy exit for sick and unviable units.

"This is a must if we are to re-deploy existing un-productive assets in sick and unviable units for productive use," Mr Kanwar said.

On the proposed value-added tax regime, he held that all State-level taxes such as Octroi, entry taxes should get subsumed in the VAT rates.

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