Bullish on India: Most businesses seeing signs of recovery: Former Commerce Secy

Former Home and Commerce Secretary Gopal Krishna Pillai

Most of India’s businesses that were hit by the pandemic are seeing signs of recovery amidst rising capital investment and improvement in infrastructure, said Gopal Krishna Pillai, former Home and Commerce Secretary.

“Capital investment is rising, infrastructure is improving and most businesses are seeing signs of recovery. Overall, the economy is doing well. I am bullish on India,” Pillai told Moneycontrol.

The going got tougher with the onset of COVID-19 in 2020, which was to test India’s resilience in full. The pandemic led to one of the most stringent lockdowns anywhere in the world, hurting livelihoods and small businesses. The vaccine rollout enabled businesses to get back on to their feet, the economy to bounce back, and life to get back to normal.

The financial sector in India has been stable and resilient, as reflected in sustained growth in bank credit, low levels of non-performing assets and adequate capital and liquidity. Both banking and corporate sector balance sheets have been strengthened.

Capex push unrelenting

The central government's capex push has been unrelenting. The central government has budgeted Rs 10 lakh crore in capex for this fiscal year. The capex push, over the last three years, has driven growth in the construction sector, closer to the pre-pandemic levels.

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However, concerns about exports will continue as demand from Europe is down. “Exports will be slightly muted till the end of this financial year,” he said.

Demand for Indian goods in key markets such as the US, China, Bangladesh and Singapore has seen a significant drop in recent months. Latest data shows that India's exports to Beijing, the fourth-largest buyer of Indian goods, dropped 14.9 percent in April-July 2023, compared to the same period last fiscal. However, outbound shipments to the US, India's top merchandise export destination, fell 12.48 percent on year during the first four months of the current fiscal.

Pillai said that there is a need to improve the ease of doing business further and avoid frequent policy changes. The government has set up a working group to decriminalise laws to further promote ease of doing business.

There is also a need for the Centre to focus on rising crime and ensuring public order to generate investor confidence, he said.

The Enforcement Directorate’s (ED) list of money-laundering cases has gone up more than twice in the past three years ― between 2019-20 and 2021-22 ED probed 2,723 cases compared to 1,262 cases between 2012-13 and 2018-19.