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President’s Message
Dear Members,
As I come to the end of my tenure as President of the Mahratta Chamber of Commerce, Industries and Agriculture (MCCIA),
I am happy to share with you my thoughts, relating to the economic scenario, and to the Chamber's role, on this occasion.
The global economy, which was beset with an unprecedented recession in 2008 / 2009 mainly arising from reckless
over-leveraging – by the Realty and Banking sectors in USA, has generally recovered to a significant extent. Nevertheless
the growth rates in Europe and Japan continue to be disappointing. The US, though it has grown in GDP terms and
employment terms, is not the strong engine of the global economy, that it till very recently, was. There is a real financial
crisis in the Euro zone, mainly on account of disconnect between – on the one hand economic unity i.e. single currency,
and on the other hand political disunity i.e. independent sovereign countries (with economic strategies and agendas
that are very different). This is a difficult problem to solve. The world economy will be impacted severely if Europe cannot
sort this out.
The Indian economy, in the last couple of years has remained largely stable, though the growth rates have been
noticeably lower than during the period before the global recession. The fundamentals of the Indian economy, in terms of
higher entrepreneurial spirit, growing demand, young population, robust banking system, a modernising rural economy,
etc. have been the main causes for this relative stability in growth rates. However the industrial growth did experience a
reduction coupled with much higher inflation than before the global crisis. The stock markets have recovered to a
significant extent, yet two factors affect the sentiment on the bourses.
1) Hesitation of global investors - international and Indian - to increase exposure to India, and
2) Policy paralysis of the Government, coupled with numerous corruption scandals. Generally poor governance at various
levels of government.
The two are related. India can attract higher investments both from international investors and also domestic investors, if
the sentiment about the health and prospects of the Indian economy can be restored.
In this context it is important to recall that India's liberalisation of 1991 was based on 5 basic principles.
a) Government would control fiscal deficit to below a level of 4.5 per cent – this meant imposing tight control on
government expenditure, and improving productivity of government itself.
b) Privatise business and encourage competition i.e. Government should get out of the log jam of its unproductive
investment - in manufacturing industries, in trading businesses, in service enterprises - that it was not able, neither
equipped nor competent to run. Commodity manufacture like steel production, also service industries like airlines and
hotels, and manufacturing industries like textiles, electronics, etc. - were to be gradually privatised in a competitive,
transparent and open environment, to improve the nation's productivity. This would also free government resources -
for investment in core areas like infrastructure, defence, etc.
c) Globalise the Indian economy i.e. open the economy to international trade, allow foreign investments, allow
enhanced foreign trade, encourage Indian investors to invest abroad on sound business considerations. This was to be
done in order to modernise Indian businesses, improve competitiveness and expose the country to the current
technological and functional trends, in the global arena of trade and industry.
d) Deregulate trade and industry i.e. Government was to get out of the way of entrepreneurs, to facilitate creation of
wealth as a priority. This was actually expected to foster genuine competition, and make India an attractive destination
for investment.
e) Create inclusive society i.e. improve infrastructure, physical and virtual - to connect the villages, the towns and the
cities, open up the fields of education, enhance employment opportunities, enhance health care, etc. This was
expected to provide the large mass of India's millions, with greater opportunities, and improved quality life.
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