Observing that society is at a turning point of history, newly elected president of industry chamber CII, Uday Kotak said this is a time for Indian business to transform and take a positive approach towards investment for building ‘AtmaNirbhar Bharat’
Urging India Inc to take advantage of the opportunity thrown up by COVID-19 crisis, he said, those with lower leverage should not shy away from making fresh and bold investment in the new strategic sectors.
Mr. Kotak, who is also the managing director of Kotak Mahindra Bank, advised India Inc to tap the capital market and raise a buffer fund for survival during the challenging time.
“With the COVID-19 impact, we will now see a world where there will be significant consolidation… there is likelihood of fewer players in most sectors as we go forward,” he said in an interview.
This is a time for India and Indian business to transform and take a positive approach, he said adding that he was extremely enthused by the Prime Minister’s positioning on AtmaNirbhar Bharat.
Acknowledging that poor corporate governance and excessive leverage haunted Indian industry in the past, he said, it is time to take a fresh view on investment, with cleansing of unhealthy elements in the functioning of the corporate sector almost over now.
“I do believe that in today’s times, businesses and companies that have relatively lower fixed operating costs and have lower leverage are very well positioned to take advantage of the opportunity ahead of us,” he said.
He also said there is an opportunity to revive some of the dead assets and look at them with a fresh view and make investment at a time when long-term interest rates are coming down.
In order to achieve AtmaNirbhar Bharat or self-reliant India, he said it is imperative to increase investment in the social sector including healthcare, education, environment and rural infrastructure.
The country needs to increase investment in healthcare from 1.3% of the gross domestic product (GDP) to somewhere between five to 10% of the GDP, he added.
He said that India Inc has to redefine what it considers investment for the future and go after that.
Historically, we have been measuring investment in a narrow sense, like auto capacity and steel capacity. That is needed, but the broader vision requires us to increase investment in healthcare, education, mother nature (environment) and rural India as the priority, he said.
The nation needs investment to spur growth and that is going to make us AtmaNirbhar Bharat, Mr. Kotak said.
“The second part of AtmaNirbhar Bharat, which I think is important, is that we need to be self-reliant and competitive and engaged with the world. Therefore, I do not see any inconsistency between self-reliance and competitiveness, we must do both.”
“That is the inherent message of the Prime Minister and we really need to go down that path because, very often, turning points redefine our history and we are at one such turning point,” he said.
On achieving the goal of $5 trillion-economy by March 2025, Mr. Kotak said that one has to think in terms of five-day cricket test match. One cannot predict what would happen on the fifth day on the basis of performance on the first day, he added.
“We are still on day one, just after lunch… We have had very bad weather. The ball is swinging a lot and it’s very difficult for the batsman to bat on that pitch because of COVID-19. But do we make a judgement of what will happen at the end of fifth day, or is it a little early. Let’s see how we can granularly get our growth back,” he said.
The nation needs to gradually get back to the February 2020 levels and as we build that innings, we can then take a call on speeding up the game, Mr. Kotak said.
Asked if the upcoming GST Council meeting should consider rate cuts to spur growth, he said, each and every item has to be looked carefully and a call will be taken depending on the room available.
The all powerful GST Council meeting headed by Finance Minister Nirmala Sitharaman is scheduled to take place on June 12.
“I think each area has to be looked at specifically, analysis needs to be done and if some tweaking is required, we should consider that certainly,” he said.
On the criticism of the ₹20.97 lakh crore-economic package largely addressing supply side and doing little to perk up demand, Mr. Kotak said, there will undoubtedly be a requirement for further fiscal support.
“Some of it will have to be on the demand side, but it will have to be very carefully sequenced and calibrated… We need to look at sustaining demand beyond immediate pent up demand, and therefore a sequencing of demand side support by the government has to be there,” he said.
He expressed hope that the government may be planning to push demand through another stimulus down the road.