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Business News/ Economy / Best time to take advantage of global crisis, Anish Shah urges Indian companies
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Best time to take advantage of global crisis, Anish Shah urges Indian companies

The president of industry body Ficci said domestic companies are well-poised to make capital investments and spur India’s economic growth

Policy makers are expecting domestic businesses to follow the lead taken by the government in stepping up capital investments to accelerate economic growth. (Bloomberg)Premium
Policy makers are expecting domestic businesses to follow the lead taken by the government in stepping up capital investments to accelerate economic growth. (Bloomberg)

Indian companies should take advantage of the economy’s faster-than-expected growth and make capital investments despite global challenges, said Anish Shah, president of the Federation of Indian Chambers of Commerce and Industry (FICCI).

While some sectors such as hospitality are taking the lead in making investments, others are cautious due to global challenges, although it would only be a matter of time before they too follow suit, Shah said in an interview.

Conceding there were challenges in terms of global economic growth and geopolitics, Shah insisted India’s economy was on firm ground given its robust growth rate. 

“Indian companies are well-poised because their balance sheets are deleveraged," he said. “And if we do see a global crisis, this is the best time for India to take advantage of that crisis."

The Reserve Bank of India on Friday raised its growth expectations for India’s economy in the current financial year to 7%, from its earlier projection of 6.5%, taking comfort from rising rural consumption and increasing capital expenditure.

Shah, also group chief executive and managing director of automaker Mahindra & Mahindra Ltd, said fresh investments were evident in some sectors.

“If I comment first on the auto sector, from Mahindra’s perspective, we have doubled capacity for SUVs already… we’ve been ahead of the curve on this. And that’s also a function of the demand we are seeing for SUVs and we’re looking at creating more capacity," Shah said.

On other sectors, he added: “We (have) started to see a lot more demand in India for a variety of things. If you look at holiday resorts, for example, there’s a lot more demand for holidays and hotels in India, and we started to see a lot more investment coming into that space. So I think it’s just a timing issue (for more capital investments)."

Shah’s comments come in the context of policy makers’ expectation that businesses should follow the lead taken by the government in stepping up capital investments to accelerate economic growth.

Chief economic advisor V Anantha Nageswaran said last week that greater private investments could accelerate economic growth. “India’s growth engine can now become faster and accelerate if the much-awaited private capital formation kicks into higher gear," Nageswaran said on Friday. 

Shah said India’s interest rates are far lower than those in many other economies, and not significantly higher than pre-pandemic levels. “So (what is) more important for us is to ensure that inflation is well under control," said Shah.

While RBI kept its repo rate unchanged at 6.5%, inflation remains above its target of 4%. The central bank maintained its inflation projection at 5.4% for FY24.

Shah also said India’s rural economy is reasonably strong and would continue to see greater momentum. Although erratic monsoons contributed some weakness to the rural economy, it was a short-term trend, he said, adding that for the medium-term, India’s rural economy was on track.

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ABOUT THE AUTHOR
Gireesh Chandra Prasad
Gireesh has over 22 years of experience in business journalism covering diverse aspects of the economy, including finance, taxation, energy, aviation, corporate and bankruptcy laws, accounting and auditing.
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Published: 11 Dec 2023, 09:01 PM IST
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