Davos 2023: India has done well, but it should not become ‘complacent’, says Ajit Gulabchand, CMD of HCC

While there are worries on account of the global uncertainty and the geopolitical situation, India has done well compared to other markets, but it should not become ‘complacent,’ Davos veteran and Chairman and Managing Director (CMD) of Hindustan Construction Company (HCC) Ajit Gulabchand said on January 17.

“At the present moment the global economy is in a bit of a turmoil. Quite a bit. You had recovery from pandemic, losses from the Ukraine war disrupting supply chains, all these have led to high inflation, as well as strong measures to control inflation. It is not a very happy scene with the western world. India is part of this world, it is very well-connected. So, it will also (face the) fallout of (these developments). While there is optimism because it has really done well compared to some of the other emerging markets, we need to be careful. That’s because there are many surprises (that could spring up) during the year,” he said on the sidelines of the World Economic Forum (WEF) in Davos on the challenges of a post-pandemic world and what India needs to do.

He said that India will have to be careful as there could be dangers it has not anticipated. “Get our policies right, which we are doing. There are some dangers that we may not anticipate. We are doing much better than other emerging markets and developed countries even though they are developed countries. But they are developed countries.  I think, while there is optimism, which is a good thing because it gives you the spirit to fight back, it is equally important to note that things can go wrong, and we must be ready for that,” he said.

He said that the biggest problem that India faces today is inflation.

“With all the progress that has been made in the area of digitisation, more than 50 percent of the economy is outside the banking system,” he said, adding that any kind of intervention by the Reserve Bank of India (RBI), such as through interest rate rise, can have an impact.

“…there may be some hesitancy on the part of investors from abroad. We have to be extra careful and create those right reforms which can make us even more attractive. People will look at the business environment (for) improvements,” he said.

On the ease of doing business, he said the government will have to open up further.

“It has improved a lot, but not fully. For it to be a way of life, for example, the amount of permissions that are still required, the amount of things one has to do to get things going are quite a bit. Small things ― going abroad, buying things abroad, selling, etc., all of these are still under government control. Even our visa systems, most of these countries do not need visas, they get permanent visas, and they move without stamping their passports. There are many such little things that may not occur to the bureaucrat, but to the small business traveller this does become an encumbrance. I think, the government is aware, but it will have to do a lot more and will have to make some more reforms in order to make India more attractive.”

“I would be most worried if we become complacent. Because we have done better than others. Don’t be complacent,” he added.

On his ‘dream reform’ expectation from Budget 2023, he said the government should simplify the Goods and Services Tax (GST). “Make it a single rate, keep it a little lower. That’s it.”