Tackling soaring prices of raw materials and daily consumed items should be the top priority of the government and the Reserve Bank of India (RBI), which will help India get back on the path to growth. While COVID-induced disruptions, followed by the Russian-Ukrainian war, have led us into an uncertain world, India’s economy is set to grow in the medium to long term if current challenges turn into opportunities, a group of analysts said. business leaders at the 2022 World Economic Forum (WEF) in Davos.
In a panel, including Amitabh Kant, CEO, NITI Aayog, Saniv Bajaj, President of Confederation of Indian Industry (CII) and CMD, Bajaj Finsev, Amitabh Chaudhry, MD and CEO, Axis Bank, TV Narendran, Global CEO and MD of Tata Steel and Adar Poonawala, CEO of the Serum Institute of India, told Business Today that while the future is difficult to gauge amid current uncertainties, India could emerge as an alternative to China on the global stage when it comes to Manufacturing.
According to Sanjiv Bajaj, economic growth will return soon. “Inflation is under control; RBI is already working on it. The government has reduced the excise duty on fuels in accordance with the request of the CII. Private investment has not reached the level it should have been in recent years, but it is also coming back now. So it’s a matter of time before growth comes back,” he told BT in Davos, Switzerland, on the sidelines of the WEF.
Amitabh Chaudhry, chief executive and managing director of Axis Bank, believes the private investment cycle is still a bit far off. “In April and May, we saw borrowing increase in double digits after a while. But it is above all loans to individuals that benefit micro, small and medium-sized industries. The war in Ukraine and the resulting uncertainties are pushing large-scale private investment beyond the time we would like to see,” he said.
According to Amitabh Kant, CEO of NITI Aayog, the government’s apex think tank, the large-scale structural reforms implemented by the government in recent years take time to reflect on the ground. “The Production Incentives Program (PLI) launched in 14 sectors has already attracted enormous interest from private companies. It’s not about the next few years, it’s about the next three decades. We have grown at high rates in the past, but for brief periods. Now we have to do it consistently. The buzz is very positive for India at the WEF,” Kant said.
However, the latest moves by the government to turn India into a manufacturing hub and compete with China have hurdles to overcome. As China already enjoys a significant advantage in terms of economies of scale and is an established player in many sectors and/or industries where India is trying to gain an edge, it will not be easy to beat the Dragon at his own game.
TV Narendran, global CEO and managing director of Tata Steel, believes the Indian government’s push on infrastructure development could be a game-changer. “We are going in the right direction. The government is spending 30-35% more on infrastructure development, which will help reduce the cost of logistics. Currently, it is 11-12% (of the total cost) whereas it should be between 7 and 8%. So while industry gains competitiveness inside its factories, government complements outside,” he told Business Today.