Amid growing perceptions of policy paralysis, top industry leaders have come down heavily on the current state of affairs in the economy, saying that India's image seems to have taken a hit.
Top business leader N R Narayana Murthy, co-founder of home-grown global IT giant Infosys, has said, "Over the past 3-4 months, India's image seems to have suffered. As an Indian, I feel very sad that we have come to this state."
Another IT major Wipro's Chairman Azim Premji has said that "we are working without a leader as a country. If we do not change, we would be down for years."
The comments from the two leaders come amid warning from the global agency Standard and Poor's that India risks losing its 'investment grade' rating due to "slowing GDP growth and political roadblocks to economic policy making".
In an interview published by global investment banking giant Morgan Stanley on Monday, Murthy also said that India was suffering from challenges that were self-inflicted.
"Unfortunately, we have created these challenges ourselves. It is self-inflicted. There is nothing coming from outside. The good news is we can correct it. We have done enough damage but could end up doing more damage," he said.
Premji also made his comments during a conference call with equity analysts on Monday, also the day when S&P warned of downgrading India's rating to junk status.
While the government has already rejected the concerns raised by S&P, Congress MP Mani Shankar Aiyar today said Premji and others are "representing a class interest and the Government of India represents a national interest".
He further said these are the same people who were praising the same leadership and because they have some problems now that they have "started screaming to the skies".
Interacting with the analysts, Premji also said that the world macroeconomics was still very volatile, the fate of Greece was still hanging, while India had its own problems of regulatory paralysis.
Murthy said India needs foreign investors for its infrastructure and for an economic growth of 8 or 9 per cent.
"So we need participation from outside and, for the foreigners to come to India, we have to be seen as a proactive, investor friendly, and stable governance model.
"This is where the government should not send the kind of signals that it has recently sent by introducing tax laws on a retrospective basis. It does not matter what the intentions are. Nobody can understand intentions; people can only read the laws and then act," he added.
Asked how India can fix its current situation, Murthy said, "If you brought in 7-8 major reforms over the next two years, I think India's story will change.
"India’s credibility will change. All my CEO friends, who are very disappointed with India in the last few months, will definitely change their view," he added.
Another top industry leader Deepak Parekh also said on Monday that it is the "lack of political will" that was holding India back and investors can no longer be placated by talks of "long-term fundamentals".
In his annual letter to the shareholders, HDFC Chairman said that most of the recent problems "have been self induced - lack of fiscal rectitude, uncompromising coalition partners, inability to gain consensus on crucial legislation, stalled reforms, corruption scandals and a sense of apathy towards foreign investment."
Murthy said the government will have to take steps to do something very positive. "To do something that says that we mean business; that means we want to welcome foreign investors," he noted.
Narayan Murthy, Azim Premji Lament Policy Paralysis
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