Despite global headwinds due to the ongoing Russia-Ukraine war and lingering post-pandemic challenges, the Indian economy has some “bright spots” to help sail through the choppy waters, industrialist Kumar Mangalam Birla said on Friday.
Addressing shareholders of Aditya Birla Capital Ltd (ABCL) at the company’s Annual General Meeting (AGM), Birla said the turn of the decade felt like a “moment of departure”, making 2020 an unprecedented year marred by the pandemic, followed by supply side woes of 2021 and then the Russia-Ukraine war in 2022.
Global stagflation is making 2022 feel unprecedented and disruption now feels like ‘business as usual’, Birla noted.
“The Indian economy has not remained unscathed by these global developments. India has also witnessed upward pressures on inflation, rate hikes by the RBI and a widening trade deficit. We are also seeing greater turbulence in currency markets,” said Birla, chairman of Aditya Birla Group’s financial services arm ABCL.
Nevertheless, the Indian economy has several bright spots in its overall economic narrative with a strong recovery cycle and projected growth rate of over 7 per cent in the current fiscal year, he said.
Talking about the high rate of inflation, which has remained well above RBI’s upper tolerance level for some months, Birla said the overshoot has not been as severe as in many other countries.
Combative efforts taken by the RBI and the government to help ease inflationary pressures and prospects of good monsoon this year will soften these pressures further.
High foreign exchange reserves, which can cover more than 9 months of imports, are supportive data points, despite rising trade deficit. These factors support India to stay steady through the broader global economic turmoil, the ABCL chairman said.
“With these silver linings, India appears to be well placed to ride through an uncertain global economic environment. India has a robust pipeline of infrastructure projects. In addition, the government’s pragmatic policies such as the production-linked incentive schemes are helping.”
Among others, many fresh investment proposals by industries, strong foreign direct investment as well as decline in the non-performing assets in the banking sector also help support growth, he noted.
Startups and technology-based new age enterprises have acquired critical mass in India. These sectors are exhibiting a strong momentum, providing new jobs and enhancing customer experiences, Birla further said.
“Dynamism in India’s digital ecosystem, diversification of global supply chains away from China and the greater emphasis of investors on sustainable finance also offer new opportunities for India,” he told the shareholders.