Mumbai: India’s largest retail chain, Future Group, has been growing steadily despite last year’s slowdown. Chairman Kishore Biyani says the economic recovery is still fragile, and an interest rate increase may hurt growth. In an interview, he also said the government’s exit from economic stimulus measures should be calibrated to protect the recovery. Edited excerpts:

What is your assessment of consumer demand at this point in time?

Diwali has been good, which everyone knows. December was a very good December... So in that sense, we are upbeat in terms of the confidence level which we have seen. We have seen people splurging money. We have seen demand for a lot of new categories emerging; we have seen some indulgence on some products by the consumers.

Inflationary pressure: Future Group chairman Kishore Biyani says the retail group hasn’t been affected by the rise in food prices to a large extent as consumers have adapted to it by changing their consumption pattern. Ashesh Shah / Mint

You made the point about food price inflation. Has it in any way affected consumption, and consequently affected your sales?

Not yet to an extent because consumers have learnt to downtrade or look to shift of consumption of that product to something else. Some products cannot be replaced, like sugar, potatoes, onions; they are not replaceable products. So there are pressures on some products which are impacting sentiments to a certain extent in consumers. But, overall, I think we have started to learn to live with some kind of inflation on some products. But that doesn’t mean we are happy.

It is widely expected that RBI (Reserve Bank of India) will tighten rates. If and when that happens, what kind of impact will it have on consumption?

There are a lot of good things which are coming out after the stimulus package was announced. The demand has got created on cars, consumer durables, FMCG (fast moving consumer goods, or personal and home care) products; the business mood has become optimistic. We have started understanding businesses; we are doing much better business in terms of revenue levels at much lower cost than what we used to do earlier.

So there is a sense of good days emerging. I think any dampener would not be in the best interest of things that are happening at this moment. So interest rate hikes can be one of the dampeners. I believe, right now, the phase is reasonably good, and we should allow it to be good for a little bit more time so that we have settled into it and then probably do something about it.

The government has been hinting that the stimulus may be gradually withdrawn. Do you see that happening? How will it affect if the measures are withdrawn?

A calibrated approach to everything is probably one of the best ideas I have seen from the government coming about. So they are looking at calibration. I think this is an approach which we need in an economy which takes its time because every cause-and-effect takes some time to get settled.

So if something happens today, we will start seeing its impact after a period of time. We are starting to see the impact of stimulus in terms of lots of product sales in the country. So I think withdrawing it in a calibrated manner would probably help us to adjust to whatever effect it will create.

26 January is a significant event in your sales calendar. What kind of targets do you have in mind? Do you expect sales to be as robust, or better than what they were last year?

This is one event which we always look forward to. This year the target is 25-30% higher than what we achieved last year. I think there has been a lot of preparation which goes on for a whole year which goes into building up of this event.

With a large number of stores and larger number of products, we are offering consumers something new this year in a real big way, where every manufacturer has come together and products have come together, brands have come together and the entire office has worked on it, and we hope consumers would love it.