In a chat with Business Standard’s Arup Roychoudhury, CEO of ReNew Power and President of Assocham Sumant Sinha tells why India could grow at 6-8% per annum if external risks don’t upset the cart
Q: Now that we are on a path of recovery, we find ourselves in a disruption where there is a disruption in global supply chain and there is volatility in commodity prices. In this background, what is your assessment of the FY2022-23?
Ans:
- India has, over the years, resolved many of its structural challenges impacting macroeconomic performances
- External risks facing India are US Fed increasing interest rates and geo-political issues around the world
- External risks will impact commodity prices, oil markets etc
- Indian economy in a healthy position – demand growth expected, corporates ready to invest for capacity creation
- India looking at long-term growth at 6% to 8%
Q: While there is usually known question on India could register a better growth than other emerging markets. But even by RBI’s own admission, right now the bigger issue is inflation. How do you see inflation impacting business?
Ans:
- Not all cost increases can be passed on to the consumers, as it impacts demand
- Corporates absorbing inflationary impact will have effect on margins
- Rising interest rates will also impact corporate bottom lines
- Corporates may shrink some of their margins because they cannot pass on all the inflationary impact to consumers
Q: Mr Sinha, it has been a long wait for private sector capex to come in. Especially during the pandemic, investment has mostly been driven by state and central governments. While there are some signs of a turnaround by private sector capex, by when do you think it is really going to pick up?
Ans:
- Private sector capex picked up in infrastructure sector.
Corporates raising capital from outside the country and working on capacity utilisation
- Power sector witnessing robust growth in demand
- Power sector in need of rapid capacity expansion to meet the demand growth
- Power sector needs more coal, as more than 70% of India’s power consumption is met from coal
- Demand is picking up in cement, real estate
Q: Hospitality, tourism, retail, cinemas – as you know these have been the worst hit during the three waves of pandemic. These are also the sectors that are struggling to go back to the pre-pandemic levels. Govt has taken some steps. Do you think that is enough? What more do you think can be done to revive these sectors?
Ans:
- More than govt assistance, industries need the economy to pick up
- Although Covid-cases are picking up a little bit, it’s thankfully a milder version
- Economic activities should carry on. People are also going to carry on with their normal lives
- As people carry on with their lives, hospitality, tourism, retail sector will see huge pent-up demand
Q: The National Monetisation Pipeline and the National Infrastructure Pipeline – the two ambitious plans on which the govt is building revival program, a lot of these would be through public-private partnership. Previously the private sector has not had many good experiences with the PPP model. So, do you think there is a case for a complete overhaul of the PPP policy? And what are the assurances that the govt can extend to the private sector that the earlier incidents will not occur again?
Ans:
- Power sector enjoys robust dispute resolution mechanism in relation to PPP and the govt is responsive to problems
- Govt needs to walk the fine line of getting people to commit to the contracts and also extending some leeway
- In a volatile economic environment, the govt needs to be more flexible
Source: business-standard
