Full transcript: Anish Shah and Neelkanth Mishra's panel discussion at Moneycontrol's Global Wealth Summit

Moneycontrol Global Wealth Summit 2025

Neelkanth Mishra, Chief Economist at Axis Bank, Head of Global Research at Axis Capital and UIDAI Chief, said in a fireside interaction at Moneycontrol's Global Wealth Summit 2025 that India also needs a ministry like the DOGE in the US.  Speaking at Moneycontrol Global Wealth Summit 2025 at a session titled "India's Road to $10-trillion m-cap by 2030", Anish Shah said, "Very optimistic on the Indian economy, it is just a matter of time that private sector capex will happen

Here is the full transcript

Sonal:  We are standing at the cusp of an unprecedented leap today, a 10 trillion stock market, but achieving this milestone requires more than just momentum. It demands sustained 9% GDP growth and strong valuations. Can public investment boost growth while maintaining fiscal discipline? Will job creation ignite domestic consumption? How can exports expand amid protectionist threats? Do Indian corporates have the capacity to raise, absorb, and deploy capital efficiently. The stakes are high, and the opportunities are immense. To lead this critical discussion, I would like to invite on stage Bodhisatva Ganguli, Group Consulting Editor, Network18, and to dive into this very interesting discussion, may I please also welcome on stage Anish, Group CEO and MD Mahindra Group and Neelkanth Mishra, UIDAI Chief and Member, PM, Economic Advisory Council, Chief Economist, Axis Bank and the Head of Global Research, Axis Capital.

Bodhisatva Ganguli: Thank you, Sonal. Thank you, Anish. Thank you Neelkanth for making it here. I must say when we conceptualized this program about two months back, two, three months back, we had not anticipated the extent of the fall in the market, so please treat the 10 trillion market cap figure as aspirational. This is both for the panelists and as well as for the audience. I'm sure we'll get there, but maybe not in a hurry. Let me with those words of caution as it were, let me first start off with Anish. Under his leadership, the M&M group and M&M as a company has achieved tremendous, their market cap has grown dramatically over the last four and a half years, maybe a fall in recent times, but given the extent of gains in market cap, given how the share price has done, particularly of the flagship, it's going to get harder from now on, isn't it?

Anish Shah: Bodhi, in many ways, I'd say, if the foundation is strong then future growth becomes easier. And we've had a very strong foundation. In fact, I often remind folks that M&M was a best performing stock in the Nifty from 2002 to 2018. And after that we've grown significantly since then as well. So I think we should-- in some ways we feel very confident about the DNA of our group, the ability for us to be able to deliver growth. And as we've always said, our results will speak for themselves.

Bodhisatva Ganguli: But what are the strategic initiatives that you have in mind in terms of driving growth, which eventually, hopefully, will show up in a higher stock price over the medium term?

Anish Shah: I think that's a fundamental question, Bodhi. We start with-- the fact that we want each of our businesses to operate at a very high level. We use the term operational excellence internally a lot. What that means is that we are delivering the best products to our customers. We are delivering that in a manner that creates the best customer experience in a manner that has the highest level of productivity. And that enables us to grow market share. That enables us to have better margins. And create leadership in multiple industries that we are in. And that is what has driven our growth. And each business has a set of strategic initiatives, which I won't go into right now, just in the interest of time.

Bodhisatva Ganguli: Neelkanth, if I can bring you in, so the economic survey, I think it was, not this one, the 2024 economic survey talked about, expressed some concern over financialization of the economy. You also have some views about what is a healthy market cap to GDP ratio. Why don't you talk us as to are we now at a healthy level given the fall? What is a healthy market cap to GDP ratio?

Neelkanth Mishra: I don't think there is a healthy market cap to GDP ratio that you can prescribe at all times. Markets are going to be trading in ranges. As you think about the market cap to GDP ratio, divide it into two parts. What is the corporate profit to GDP ratio? And then what multiple you want to apply to that. For a long time, I would say from between 2010-12 to 2021-22, profit share of GDP was falling. And therefore, Nifty earnings are growing at 4%, actually till 2019. And then, GDP was growing, of course, at 11, 12%. So, I don't think in the next five, six years, profits will grow slower than nominal GDP.

So that should be supportive of a higher market cap to GDP. This is one of the reasons why even in the US, the market cap to GDP ratio is very high. In China, it's very low because corporate profitability or the corporate profit share of GDP is low. Then it comes to the multiples. Now, the multiples, by definition, will be volatile. So you will see them getting affected by cost of capital. What is the risk free rate? What are the alternatives available? And general euphoria and pessimism and I think we are coming off of a very high level. We were at a record high. We've never seen those levels. The range that if you plot 2004 to maybe 2000, 20 or so was 60 to 80%. We were at 120.  So we are now maybe down to about 100%. Can it fall another 10% from here? Perhaps yes. Will that happen because nominal GDP grows and market cap stays the same? I think that's the most likely scenario.

Bodhisatva Ganguli: I just wanted to pick up one of the themes that also leads us into questions on consumption. But again, the recent last economic survey, and I think the one before that also, has criticized the corporate sector because what it's saying is that the rate of growth in profit, I'll ask Anish to wait on this but first you go. The profitability has grown quite fast, but they're not paying enough by way of wages The wage growth is slow. What are your thoughts on that? And is that leading to a weakness in consumption?

Neelkanth Mishra: I think the observation is right. I'm not sure (inaudible) always do what is right for them. (inaudible).

Anish Shah: I've never counted the hours, but I would always spend weekends with family. That's my balance, right? I think each person should set their own balance and should do what is right for them at that point in time. So there should not be a definition, the output, the quality of the output. It's about the balance that each person wants. And organizations must support that. And that's what we need a friendly culture, a friendly organization to do, is to be able to say that we recognize the balance each person wants. There are times when there are needs of individuals that require even further balance. And that's what an organization should be able to support at a time of need for each of their associates.

That's one thing at the Mahindra Group we are driving in a significant way in an overall initiative that has been there as part of our culture for years, which is around We Care, a specific maternity program that we have is a five year maternity program in terms of significant, not just benefits, but in terms of how we provide the time that each person needs when they go through maternity and not just that, but across many different things. So for me, it's more around, can an organization support the needs of each person? And can each person ensure that they have the right balance that is appropriate for them?

Bodhisatva Ganguli: So, the question is for both of you. So, obviously economic growth since COVID has largely been driven by government capex. And I think in the communication after the budget, the finance minister and interviewed the former finance secretary, now the SEBI chief, they've all said that this, so the government capex obviously can't keep growing at 20% plus indefinitely. So the private sector needs to step up. When will that happen? Anish, why don't you go first and then I'll come to you.

Anish Shah: Bodhi, first, I would give a lot of credit to the government for staying consistent on capex because the multiplier effect is far greater. Having various shops can increase demand in the short run, but that's not the right approach for the economy, so I would give a lot of credit there.

From a private sector standpoint, again, back in a capitalist society, it is going to depend on capacity utilization. Our auto business has almost quadrupled capacity now in the last four years because we've seen that level of demand. The industry overall has not grown at that rate. Many other industries are starting to get to 75-80% capacity utilization, that's when we're going to see greater capacity come in. So, I feel that private sector capex will follow. Overall, we are very optimistic on the Indian economy and it is just a matter of time that that will happen, but that is part of driving greater demand and which will then result in higher capacity utilization and therefore private sector capex.

Bodhisatva Ganguli: Neelkanth.

Neelkanth Mishra: Yeah, so I think we have to view the problem a bit differently. We are getting caught into that classic psychological trap that something that you see very often you think is very important. Just to give you perspective, if India's investment to GDP ratio is 32%, central government capex as a percentage of GDP is 3.2%. So it's only one-tenth of the total capex that we are doing currently. So, to ascribe all of investment in India to just what the government is going to do in the next three months is, I think, being very myopic.

So I would break this down into two parts. The first is, why did the investment to GDP ratio fall in the first place? So of the 7% fall from 34 to 27, between 2012 and 21, (inaudible). It depends on how fast the approval should come through and all that. Once that starts reviving, I think the economy will be fine.

Bodhisatva Ganguli: Two quick questions. First I'll go with Neelkanth. Is there any, you know, the government has also been concerned about the fact that the economic growth is close to 6%. It should at least be closer to 7%. I mean, there's been some concern on that, on that fact. Are there any-- is this a cyclical kind of a slowdown or are there structured elements?

Neelkanth Mishra: It is absolutely a cyclical slowdown. It is a self-inflicted slowdown. There were three factors, fiscal, monetary, and regulatory. So the fiscal was because of elections, the government spending took a few months longer than it should have. So the first half of the fiscal year was unduly slow. Regulatory, I think our regulators have become too risk averse, and as the governor very rightly said that we need to balance safety and efficiency. That is same-- that's happening in other regulators as well.  So at least some of the regulatory tightening is being reversed.

On the monetary side, I think we have been unduly tight. There used to be this FROIS spread, which is the actual cost of fund versus the announced cost of funds, like the Fed funds rate and what's actually the LIBOR rate, which we used to track the stress in the financial system in the financial crisis. In India, the 12 month CD rate is still 760. It is not anywhere close to 625 or 610, which is a 12 month OIS. The 3 month CD rate has actually gone up by 15 basis points in the last couple of months. So, the cost of liquidity is very high, and therefore, liquidity easing is a very important thing. The RBI is working on it. You must have seen they've done first 1 trillion of OMO, then 10 billion dollars of buy sell swaps, another trillion rupees of OMO. I think another 2 3 trillion is needed. And then I think the growth rates can rebound to 6.5-7%.

Bodhisatva Ganguli: Anish, M&M Group is presented across a wide range of businesses and sectors. Do you see any slowdown in consumption?

Anish Shah: We have not seen a slowdown, again, a function of the products we've had. Our auto business, our SUVs will grow 20% year over year. Our farm business is growing well. In the fourth quarter, we're expecting a 15% growth year over year. And that's very significant from a rural standpoint. Hospitality, our resorts are at 84-85% capacity. So, as we look across businesses, we've seen a lot of positivity, actually. I think Neelkanth explained it really well in terms of the short term impact and what drove that. A lot of those factors have reversed now. So with that, we would expect growth to increase.

And if I were to just take a step back, over the last 30 years, India has grown at 6.5% on average. If you look at some of the factors that will change the growth rate that are in play already, the digital stack that drives productivity, GST, which makes it much easier to transport goods across states. A number of other actions taken to drive ease of business, we would expect an 8% plus growth rate over the next decade. That is the goal that India should have, and that is something that's eminently feasible given what we have today.

Another factor that will drive that is make in India for the world. And today we are much better placed to be able to talk about products that we have in India that are of a very high quality. That often are of a higher quality than products made by others in the world, across industries. And that is something that's going to give a much greater flip to manufacturing in India, which will continue to drive that growth rate up.

Bodhisatva Ganguli: Thanks. One last question. Anyone can go first. Does India need its own version of Doge, the Elon Musk? I think he's going to toss it to you.

Neelkanth Mishra: I do think so. I think that an economy, seven times our size, like the US, has 16 departments. In India, I think there are some 85 departments and 53 ministries. I mean, we have a ministry of power, ministry of coal, ministry of oil and gas, ministry of new and renewable energy, and the batteries are done by the ministry of chemicals and fertilizers. If you think about electric vehicles, electronics done by Ministry of Electronics, cars done by Ministry of Heavy Industries, batteries done by Ministry of Chemicals and Fertilizers. Clearly, as the world moves towards more industrial policy, I think we need a much, much better aligned government structure.

So, I'm not so sure about the whittling down of the government size. Our government is already too small, but it needs to definitely bulk up in some essential sectors in health care and education, for example, but that definitely needs to be a lot of restructuring of the government for us to be more competitive.

Bodhisatva Ganguli: Anish, you want to take a shot at that?

Anish Shah: I think the key factor is efficiency. Think about how we would think about it in the private sector. Are we running something efficiently? Are we enabling each? Function in the business to operate at a level where it achieves its objective of serving the customer well. And similarly, that's the same question from a government standpoint. And what we see actually over the last few years is a much greater level of efficiency. Because we have seen a focus on driving ease of doing business. We've seen our ministers and secretaries working extremely hard. I've personally seen that in my years through FICCI last year, and I think we have seen a significant increase in that. What we also have to remember in a democracy, there are multiple stakeholders and there are certain objectives. So the goal of improving efficiency should always be there. That does not go away. But we've got to do that in a way where we do not end up breaking glass in some form.

Bodhisatva Ganguli: Anish and Neelkanth thank you so much.