Mumbai: Corporate honchos, led by Infosys chairman K V Kamath and GVK Group vice-chairman Sanjay Reddy on Saturday said long-term policies were needed to revive sagging growth and blamed lack of policy clarity, coupled with high interest rate for the current economic problems.
Delayed policy measures, slowdown in industrial production, elevated interest rates and liquidity concerns have moderated the growth prospects in the domestic economy, said Kamath.
"High interest rate is a very big challenge we have got. As far as the investment engine is concerned, interest rate is not the only issue there. Land clearances, environmental policies are not clear.
"And if that doesn't happen, you hold back your investments. There has to be clarity in all these things or there has to be confidence within the industry that these things will be handled properly (by the government)," Kamath told a University of Michigan-organised India business conference here.
Infosys founder and chief mentor N R Narayana Murthy and Wipro head Azim Premji had also said the Centre should expedite economic policy measures in the recent past.
It can be noted that after record growth numbers, the GDP had hit a nine-year low of 6.5 percent in FY12, which had led to growth revisions by some international agencies.
While the centre scaled down its GDP forecast to 6.5 per cent, investment bankers besides rating agency Crisil and Moody's Analytics brought down their forecasts to as low as 5.4-5.5 percent for this fiscal.
Kamath said fiscal deficit also need to be addressed. Capital market is the main deterrent for foreign exchange and make sure it is vibrant, he said. Fiscal deficit hit a high of 5.9 percent of GDP last fiscal from 4.1 per cent in the previous year.
"We are lagging behind China by seven years in steel and cement production," Kamath said.
GVK Group's Reddy also supported Kamath saying, "We see many challenges in the power sector. Uncertainties and reversal of policies hit investment in the power sector. Land acquisition and environment clearances delay are big challenges."
The frequent changes in policies had hit fuel unavailability for the power sector, he said adding, "The government should allow import of coal and LNG to avoid fuel crisis."
"We need political will and long term measures," he added.
Crisil chief economist Dharmakirti Joshi said, the next growth should be from manufacturing sector as services sector have already shown phenomenal growth. The domestic IT sector succeeded due to non infrastructure requirement.