New Delhi: Chairman of Tata Sons Ratan Tata has said that uncertainty in the political environment will certainly cause India to stumble and will cause the momentum of growth. Speaking exclusively to CNN-IBN on Devil’s Advocate Tata said that a mid-term election would make India's target of 10 per cent GDP growth ‘difficult’.
Talking about the Indo-US nuclear deal Tata described the deal as ‘in many ways the best possible thing that has happened to India in a long while’. He said if it did not materialise it would be ‘a serious set back to India’. He said there would be ‘repercussions and reactions’ on FDI inflows if the deal didn't go through.
He also said that if the deal did not materialise "the only people who would be happy were the people of Pakistan and the people of China".
RATAN TATA SPEAKS: Tata describes the N-deal as the best possible thing that has happened to India.
Tata also spoke about the need for government to be bold adding India needs to be a more open financial economy. He said this would require changing the mindset and legacy inherited from the days of the planned economy. He also said the private sector needs to conquer its fear of competition.
He praised Prime Minister Manmohan Singh but maintained the Government has not been able to perform as it could have or should have performed.
Tata also revealed that he could step down as Chairman of Tatas before the end of the five more years the company's rules permit him to serve.
Here are some excerpts of the exclusive interview.
Ratan Tata: I fear the uncertainty in the political environment will certainly cause India to stumble, will cause the momentum of growth, which we have enjoyed, to pause if not reverse and I for one have been extremely encouraged by what has happened in India - it started in the last regime and continued under Congress rule - of India moving forward and becoming an economic power house.
Karan Thapar:And that could start unravelling with a mid-term election?
Ratan Tata:I believe it could if there is a mid-term election and I hope there is none.
Karan Thapar: What would happen to our target of 10 per cent growth? Would a mid-term election make it unattainable?
Ratan Tata:I wouldn't want to comment on that but certainly it would make things difficult.
Karan Thapar: If the Indo-US nuclear deal doesn't materialize, is this a serious loss and set back for India?
Ratan Tata: The civil nuclear deal with the US is in many ways the best possible thing that has happened to India in a long while. Apart from the fact that it enables India to go ahead on a much larger scale in the much needed area of power - of nuclear power which is clean power - it also takes away many of the dual use sanctions which have hurt India's technological access. Over time this will give India a tremendously powerful position in the knowledge industry, in R&D, in high technology. I believe the benefits the nuclear deal will bring to the country will be enormous and I'm very sorry that on various issues this is being beleaguered.
I believe it's a serious setback to India. I believe the only people happy to see this not happening are probably Pakistan and China.
Karan Thapar:And could it also have an impact on FDI inflows?
Ratan Tata: I think it could because I think there would be repercussions and there would be reactions. I really do believe that if it doesn't happen the only people who would be happy and benefited by it not happening will be the people of Pakistan and the people of China.
Karan Thapar: So if the deal doesn't happen India would lose?
Ratan Tata:You might say that. Yes.
Karan Thapar: Do we lack the confidence to be bold? Do we lack the vision? Or the courage?
Ratan Tata: If you look at China and India, one glaring difference is that everything China has done has been enormously bold, in fact unbelievably bold, on the verge of seeming to be an overkill. (In contrast) we're always growing in small increments and we're always behind the curve and we're always trying to catch up and perhaps the time has come to go ahead of that curve and think really boldy.
I think its part of our culture. We've come from a planned economy and we just did what we had to do. I think that's a culture of the past.
Karan Thapar:So we have to change our way of thinking?
Ratan Tata: Yes and we have to have the courage to be able to live with over supply because the planned economy and licence raj has created another mindset which is that you don't live in an open, competitive world. You live in a world which buffers and protects you.
Karan Thapar:And we have to live in competition and with competition?
Ratan Tata: And to be able to win in a competitive scenario India is very entrepreneurial but somehow in the private sector we are afraid to do that. We are afraid of competition. We are afraid of foreign competition. We often don't want to see this take place.
Karan Thapar:So conquer fear?
Ratan Tata: Conquer fear and have an urge to win.
Karan Thapar: Has the government talked more about reform than it has delivered?
Ratan Tata: To some extent that could be true. It has been very vocal on reform. The Prime Minister has genuinely and seriously wanted to see the reform take place. I think the political system has not allowed delivery of that reform to take place.
Karan Thapar:Is the Left needs to look at its politicies and ask itself are those policies relevant today? It needs to reinvent itself in the light of what India has become as opposed to what it used to be?
Ratan Tata: I would not say that in so many words except, again, I would repeat we all need to reinvent ourselves. Even the Vatican reinvents itself.
Karan Thapar:Do you think you might have a successor in place fairly soon?
Ratan Tata: How long I will stay will depend on my ability to put a successor in place. As per the rules that we have I have five more years to go. I may not stay all of those five years if I have a successor in place before then.
Karan Thapar:So, in a sense, you're waiting to liberate yourself?
Ratan Tata: In many ways that's something I would absolutely agree with you. That's something I'm longing to do.
Watch the full interview on CNN-IBN's Devil’s Advocate on Sunday 8:30 PM