New Delhi, Nov 9: Promising that the government will inject Rs 25,000 crore for pump-priming the economy in the next six months, Commerce and Industry Minister Kamal Nath has called upon Indian corporates to live with smaller profits and not cut jobs. The funds will be mobilised from within the system through re-allocations and greater efficiencies without increasing fiscal deficit, he said in an interview to a television channel. To captains of Indian industry, he said, ''Don't try and boost your profits by cutting people at this moment, live with smaller profits, but retain the people you have.'' ''Indian industry must live with 30 per cent profits. (They) cannot have those huge profits forever,'' Mr Nath told the CNN-IBN.
He also said, ''I thinks we would need to pump in Rs 25,000 crore in the next six months to keep this (economy) oiled, to keep the machine moving.'' The Minister was confident of the country receiving Foreign Direct Investment (FDI) of 35 billion dollars and growth of 7.5 per cent this year. The interview on the channel's programme 'Devil's Advocate' will be telecast tonight.
Mr Nath, however, cautioned that ''growth in employment generation will be affected''. He promised relief to small and medium industries (SMEs) even while stating they have benefitted from depreciation of the rupee. Asked that companies will have to start laying-off people to remain viable as their profits had declined since 1998, the Minister said, ''We must recognise (in) the last four years companies have made 50-60 per cent profits. In the West and in the other parts of the world they are struggling with 5-10 per cent profits. So if these profits are coming to 30 per cent, Indian industry must live with these 30 per cent profits. You cannot have those huge profits forever''.
He said, ''The crisis 'is transitory' and the gloom, which has settled in the West, is (not) permanent. Let's face it, let's address it and move on.'' When told that many people think that the Prime Minister's statement of pump-priming the economy is nothing but well intentioned rhetoric, the Minister said, ''Not at all. We have now decided to pump in so much more''.
''We will definitely have to pump-in close to a Rs 1,000 crores on an annual basis in definitive projects. In power sector, Rs 1,000 crores, in roads, Rs 1,000 crores. Totally I think we would need to pump in Rs 25,000 crores in the next six months to keep this oiled, to keep the machine moving.'' Asked from where the government is going to get this money, he said, ''It is going to be reallocated between existing government revenues and we are very cautious of printing notes, we are very cautious of financial management. So, it is going to happen within the confines of good financial management. Greater efficiencies and this the Finance Minister will have to look at, from where does he trim, how does he create this.''
Asked if services could really lift performance of the economy or even grow in double digits, he quipped, "Yes. They will achieve it. They are achieving it. There has been no slowdown". On some British newspapers questioning India's rate of growth and fundamentals of the Indian economy and asking if the sheen is coming off the India story, Mr Kamal Nath said, "It's not off the India story. The sheen is off the Western world and that sheen, which is off the Western world, is causing the sentimental effect, a frenzy effect in India.'' Asked if IT companies could suffer pressure to lay off people, he said, ''I don't think so'', adding perhaps these companies may not able to create the same number of jobs they have been creating so far. "Yes, growth in employment generation will be affected" but actual levels of employment that exist will not be affected.
Asked if international economic crisis coinciding with Christian killings in Orissa, MNS threat in Maharashtra, Singur, coming elections and continuing terror could put investors off India, the Minister replied, ''I don't think so.'' ''In the first six months our FDI inflows have been 135 per cent more than the six months of the previous (year)..... Because (of) the liquidity crisis, there is bound to be some impact. But, I believe that the FDI target of 34-35 billion dollars, which we have set for this year, will be met.'' Mr Nath did not seem enthuse by suggestion of creating a 30 billion dollar special fund out of the reserves for foreign institutions seeking redemption, saying, "we should continue to be very cautious with our reserves....we should not have let it go below 300 billion dollar because when we look at our trade deficit, our fiscal deficit, we need to be cautious on these things.''