India Economic Summit: Tax cut alone cannot spur investment, says Madhya Pradesh CM Kamal Nath

Madhya Pradesh chief minister Kamal Nath on Thursday said that a cut in the corporate tax rate by the Narendra Modi government alone cannot spur investments in the country.

Speaking to CNBC-TV18’s Parikshit Luthra on the sidelines of the India Economic Summit, Nath said the government should look to attract investment and not demand it.

"Investment doesn’t happen by changing the tax rate. It doesn’t happen with this kind of things. Investment is an article of faith. You cannot demand investment, you got to attract it. People must feel attracted to the country with the ambience, with the environment,” he said.

Nath said, "Investor sentiment has been low in India. We must recognise this. All the indices are going down. Unemployment and industrial production are also going down. These you cannot kick-start immediately. A couple of months ago you increase the taxes and three months later you decrease the taxes, does that inspire investor confidence and sentiment?"

Fall in two and four-wheeler sales is an economic indicator, Nath said, "It is people wanting to be more conservative with their spending. The fear of the unknown is the biggest fear. It is not the fear of the known, the bigger fear is the fear of the unknown."

"The GST concept was good, but we have never seen so many amendments to the GST. It gave a feeling of instability. Has any kind of process seen this kind of amendments which have been made in the last 1-1.5 years? So, the rollout ran into problems," Nath added.