Last Tuesday, the chairman of Godrej Group, Mr. Adi Godrej was awarded the Pravinchandra Varjivan Gandhi Award for excellence in public life. He was also given the “gift of trees,” after he delivered a very optimistic post-award speech about how we can sow the seeds for a better Indian economy.
“It is a proud moment for me personally and the Godrej Group, because I believe that our business and social impact has grown on the basis of the hard work and dedication of all the Godrej employees, customers, and the larger Godrej family.” He also reminisced about his interactions with the late Pravinchandra Varjivan Gandhi, whom he had the pleasure of knowing as a banker when he was Chairman and Managing Director of Dena Bank.
“Mr. Gandhi has had a long and fruitful association with associations such as IMC and FICCI, to name a few. He has been an inspiration to all of us through his healthy contributions to the economy and public life,” said Mr. Adi Godrej in acknowledging the award he had received in memory of the latter.
He then went on to speak about the subject that everyone was eager to get his perspective on – the Indian economy. “I’ve been part of the consumer goods industry in India for nearly five decades now, and have seen the transformation in [our] economy from being control-based to now being more liberated.” The shift in economy, according to him, has been enabled by a number of structural and policy changes, especially over the last few years. “I would like to spend the next few minutes sharing my observations with you,” he stated.
Mr. Adi Godrej believes India remains a global bright spot with a rapidly growing major economy, with GDP growth estimated to be 7.3% (for financial year 2018). While he admits that our internal assessment, as advance evaluations show, is lower, he still feels we will beat the 6.5% estimate. In the same vein, he perceives the muted growth to be a result of the “uncertainty around possible financial stress, increased protectionism, and rising geopolitical tensions,” especially in light of the current US administration’s stances on policy and its global ramifications.
Nevertheless, India has been able to mitigate some of the negative consequences of the global financial turmoil, partly on the basis of the nation’s large consumer market; The Consumer Confidence Index stands at 128 (for quarter two of 2017), which is the second highest position in the Asia Pacific region. Hence, India remains one of the most optimistic markets of the region and even globally.
This consistent confidence among consumers has resulted in some positive outcomes. For example, urban consumption, especially in middle and high income groups, has seen a sharp increase. India’s young population, a much touted inclufencer of growth, also provides constructive, forwardlooking growth potential. Thus, we can expect further urbanisation, greater awareness, and an improvement in communication structures that will only additionally drive economic expansion in our country.
Over the last year, the government has covered more ground in the development of our digital economy. “Demonetisation has led to a significant push towards digital financial transactions, as well as improving the tax net,” the speaker points out, which made it clear that he remains one of the optimists who believe that the passage of the Goods and Services Tax Bill is a significant achievement, and that its implementation will have a positive impact on the economy.
“In my view, to have a single national value added tax is one of the key reforms since the liberalisation in 1991.” This, he feels, is specifically because the government has taken big steps towards bringing FMCG products below the 18% GST tax rate slab, which is lower than what taxes used to be earlier. This will be a crucial driver of growth and consumption in the coming years.
Towards the end, the awardee suggests a few more areas where our government can make amends, in order to enable the Indian economy to reach double digit growth figures, including: supporting policy changes such as relaxation of FDI limits in single brand retail, as well as improving ease of business through easier online applications, delicensing, and speedier approvals. “In my opinion, on a Purchasing Power Parity (PPP), India should be able to become the largest economy globally by 2050,” concluded Mr. Adi Godrej.