Mistrust between govt, businesses growing on frequent raids, searches; high-interest rate regime a challenge: Ajay Piramal

Mumbai: Businessman Ajay Piramal on Friday spoke out against the frequent raids, searches and lookout notices by various government agencies on corporates, and blamed these actions for creating a “mistrust” among the business community. The head of the diversified Piramal Group refused to comment on the media reports of Japanese investor SoftBank backing out of a proposed deal with his NBFC arm. The comments on the business climate come at a time when many a too business leader, including L&T’s AM Naik and others have been flagging these concerns. However, the massive corporate tax cuts last week has resulted in more optimism. [caption id=“attachment_2009821” align=“alignleft” width=“380”] A file photo of Ajay Piramal, chairman of Piramal group[/caption] It also comes at a time when regulators and enforcement agencies are very busy with actions like stopping Jet Airways founder Naresh Goyal from flying abroad, raiding Videocon group founders etc. Piramal chose to make the concerns public at the World Hindu Economic Forum which began in the financial capital. “Today I see there is a gap, there is mistrust between the people who are in power and the people who are wealth-creators,” he said. “Why do we need to have everything criminalised if there is a charge of an offence against you? With so much of information available, with so much of data available, do you need to have searches and raids? Do you need to have lookout notices issued? It does not give a positive feeling to any businessman,” he averred. He further said that what is critical is that wealth-creators get the respect they deserve. Without mentioning the liquidity squeeze being faced by select entities, Piramal said availability of capital is also a challenge facing the country at present. He said the high-interest rate regime is another challenge, as it makes exports uncompetitive, and pointed out that domestic businesses pay up to 14 percent interest on borrowing as against 2-3 percent in developed markets. The high-interest rate is also impacting investments and consumption, he added. It can be noted that slowdown in consumption which is seen in sliding FMCG and auto sales, along with a slowdown in new investments is being blamed for growth sliding to a six-year-low in the June quarter. The government has taken a slew of measures to boost growth, the biggest of which was the massive cut in corporate tax to global levels and also giving a lower 15 percent tax on new manufacturing investments.