While the world is still in the grip of COVID-19, most economies are seeking varied strategies, exploring unchartered territories and reinventing themselves. India, also on a journey of economic renewal in the aftermath of COVID-19, is mapping the future with renewed resilience, deploying diverse measures to counter the scenario. As part of YES BANK and CNBC-TV18’s initiative, Rising with Resilience, the India Story, Shereen Bhan, Managing Editor gets into a conversation with Dr. Krishnamurthy Subramanian, Chief Economic Advisor, Mr. CP Gurnani, CEO & Managing Director, Tech Mahindra, and Mr. Prashant Kumar, CEO & MD, YES BANK to gauge the road ahead for the Indian Economy, possible recovery timelines, and pertinent government interventions.
Responding to the need for a dual-pronged approach to raising consumption and support Industry till demand picks up, Mr. Subramanian said that Budget FY22 was fiscally expansionary apart from the 9.5% deficit Last Year, adding that this year, the budgeted deficit is 6.5% and the prime focus is on capital expenditure. Mr. Subramanian shared encouraging statistics that hint at revival. He emphasized that front-loading of capital expenditure and vaccination are crucial to sustaining the recovery, going forward. He drew attention to the Hon’ble Finance Minister’s allocation of INR 35000Cr and admitted that there would be a stretch in case the need arises. As per the Ministry’s estimate an additional INR 15000Cr may be extended if required.
Commenting on the outlook of the BFSI sector, given the possibility of an enhancement in the Emergency credit line guarantee scheme, both in terms of size and period, Mr. Prashant Kumar believes that NPA (non-performing assets) formation will be much better as compared to last year as restrictions are far less. He lauded the credit line guarantee scheme as an active measure by the Government for ailing industries in addition to offering support to Banks.
Talking about the IT sector, which managed to stay insulated from the virus, and was a driving force due to the accelerated digitization across sectors, Mr. Gurnani said that the Indian IT industry is expected to grow from $200 billion to $350 billion over the next five years; he is confident of a 10% YOY growth. Mr. Gurnani further added, “Technology can become a huge equalizer if we are able to promote social inclusiveness and economic inclusiveness, and also manage supply chain.”
On the aspects the government is assessing before further intervention, Mr. Subramanian clarified, “We continually track high frequency indicators and the way they are shaping up, we have to track the impact of the measures announced in the budget.” He further explained how increased emphasis on infrastructure spending yielded a 15% expansion in construction activity, which led to a positive spill over on consumption and contact-sensitive sectors. An overall assessment of sectors prompted by the aid the fiscal budget extended will decide the need to increase intervention in areas requiring support.
In view of the technology disruptions, Mr. Gurnani spoke about the hiring scenario in the IT Industry, talking about the fallacy of measuring growth with linear expansion of hiring. He said fast-paced technology change would have to be combined with re-skilling of labour, adding that it was imperative to create a corpus for sustained innovation, research and development.
Talking about the flurry of activity in the IPO space, Mr. Kumar explained that it is prompted by the need to service working capital requirements, repayment of debt and undertake investment.
Agreeing with Mr. Gurnani’s comments on encouraging innovation, Mr. Subramanian expressed that India is poised to compete with its global counterparts in the IT space, and reinforced the need to rise to the occasion, create world-class products and technovate to grow.
The panel’s outlook was positive on India’s resilience story and Mr. Subramanian cited last year’s GDP growth and several macro-economic indicators to demonstrate the strength of the economy, which is charting a V-shaped growth path.
Moneycontrol journalists were not involved in the creation of the article
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