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Last Updated : Aug 31, 2015 03:38 PM IST | Source: CNBC-TV18

India's response to global weakness inadequate: Tata Trusts

India should take advantage of China‘s weakness, says RK Krishnakumar, Member of Tata Trusts. Shereen Bhan caught up with him and spoke to him about the global turmoil in equities and commodities.

A disordered global scenario owing to China’s weakness and uncertainties related to US Fed rate hike presents a huge opportunity, but India is not responding adequately, says RK Krishnakumar, Member of Tata Trusts.

Speaking to CNBC-TV18’s Shereen Bhan, Krishnakumar says: “These are new opportunities where rather than a knee-jerk reaction to crisis of this kind and the impact on the rupee etc, one should look at a much longer timeframe and see the strategic implications of these changes and prepare for them.”

“The drop in international crude oil prices for me is a revolutionary change for emerging countries, non-oil producing countries like India where we have a fantastic windfall gain as a result of the crash in crude oil prices,” he adds.

Below is the transcript of RK Krishnakumar's interview with CNBC-TV18's Shereen Bhan.

Q: Let me ask you a quick word about what you are seeing as far as the idea of India today is concerned? There has been a lot of talk about yuan devaluation what it means for India the strength of the Indian economy, the resilience of the Indian economy. How should the India, the government and the cooperate sector be approaching this opportunity which is really being seen by the government as an opportunity for India?

A: India is at a cusp of a major opportunity in terms of what has happened globally particularly vis-a-vis China. We need to ask and find out what are the reasons to the success of the challenge model. What are the challenges and problems which they have had?

What led to the current crisis? What is the learning for India in this entire experience? Then design a strategy for our country which would be a better example of more sustained development model internationally than what we usually talk about China experience.

That is one area where we need to do a lot of work thinking intellectually on what actually is the lesson for India.

The other major area that I have seen is the drop in international crud e oil prices. For me it is a revolutionary change for emerging countries, non-oil producing countries like India where we have a fantastic windfall gain as a result of the crash in crude oil prices.

What does it mean for India's policies? How do we institutionalise this as a policy initiative? Where are those resources going to be deployed? The reduction in our budgeting, deficit financing and so on would actually be transformational in my view. If you think through what this means for a country like India?

Q: Do you fear that at this point in time the approach is more a tactical approach as opposed to a long-term strategic approach? That we are not really putting in place an agenda for India’s long-term strategic growth but we are really addressing this on a day to day basis. Is that the fear and I also ask you this in the context of the Prime Minister once again trying to have a meeting with industry to try and trash out ideas that India should follow to sort of chart
 out its own development model and more sustainable inclusive model. What is it that we ought to be focusing on?

A: I think that is exactly what we should be doing on more serious basis and not only the government but even the private sector.

We need to understand for a very large company what is the impact of the drop in the crude oil prices from USD 120-130 per barrel to USD 45 per barrel?

How does it translate into your operating costs, in your improving efficiencies and so on? You need to understand that and then how do we convert that gain into long term advantage.

So, I think you are right, there isn’t any in depth thinking and I am not in being critical over government or a private sector. I am saying that the Indian response to global opportunities like this is inadequate in my view.

Q: The strength of India's own reform initiative, what we need to as far as legislative action is concerned, executive action is concerned? How confident do you feel about the strength of the ideas that we have put together at this time point in time to be able to capitalise on the opportunities that this global crisis may throw up?

A: A: It is quite likely that the crisis that we are now talking about or the opportunities that we are now talking about, did not enter our thinking process a year ago, two years ago, the earlier government or the new government.

These are new opportunities where some new thinking needs to be done. Rather than knee-jerk reactions to crisis of this kind and the impact on the rupee etc one should look at a much longer timeframe and see the strategic implications of these changes and prepare for them.

Q: What would this mean for the private sector for instances global acquisitions may be, perhaps you will be able to pick up global assets cheap at this point in time. What would it mean and what kind of opportunities should the private sector be looking at for?

A: There is certainly going to be, all of this eventually result in better performance of the private sector, more resources and the government taking proactive role.

We should look at global opportunities that synergise with Indian so that at some point in the future Indian companies are not very India specific. That is not a reality in a current situation.

Indian Companies ought to be international companies. So it might be an opportunity for us to make that move not only acquisition per se but acquisitions that integrate with Indian companies more effectively.
First Published on Aug 28, 2015 05:39 pm
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