Growth woes | India on a better footing than western economies, says Sanjiv Bajaj

File Photo of Sanjiv Bajaj, Chairman and MD of Bajaj Finserv.

While India may not go unscathed, its growth slowdown won’t hit the levels currently seen in western economies, said Sanjiv Bajaj, president of Confederation of Indian Industry.

“The situation in our country is very different from the western economies. The western economies pumped a lot more liquidity into their markets in the last two years and the normalisation of that is causing them a much greater pain than India, where we are seeing reasonable growth,” Bajaj told CNBC-TV18 in an interview.

Talking about repo rates, Bajaj said that since the rates are still lower than the pre-pandemic levels, he foresees additional hikes in the future. However, he cautioned that growth shouldn't be compromised by bringing up the rates too high.

While several sectors such as auto and electronics have seen a slowdown in growth due to reasons such as supply-side disruptions, the situation has started getting better, said Bajaj. “The good thing is that we are starting to see some amount of moderation in consumer inflation in May. But we have to wait a few more months to say if inflation has peaked yet.”

Bajaj said that the impact the last few years have had on the low-income section has affected growth. “But the middle class and upper-middle have saved money despite all the hardships. So interestingly, while we are seeing lower volumes, we are also seeing higher ticket sizes. People are upgrading to more expensive products. We are seeing that with cars as well,” he pointed out.

When asked about India’s increasing trade deficit and slowdown in exports, the industrialist said that there is a need to reduce the volatility of the rupee. “Our strong forex reserves have helped us, but on the other hand, those are falling as well. We need to look at ways to shore those reserves up.”

NRI bonds could be used to bring in more money into the country. “The RBI could look at interests outside to attract NRI deposits,” he said.

On infrastructure spending, he said that while the government should continue with its plans, it also needs to make sure that it has the money for it by accelerating disinvestment and asset monetisation programmes.