Indian economy can touch US$ 10 trillion in next 15 years: HUL CMD

HUL CMD Mr Sanjiv Mehta said on Monday, in the next 12 to 15 years, India has the potential to achieve a high GDP growth rate of about 10 percent and be a $10 trillion economy.

Mr Mehta termed the present situation as a "massive opportunity for the country and stated that impetus should be given on digitising sectors like manufacturing, agriculture and pharma.

Addressing a virtual event organised by the All India Management Association (AIMA), Mr Mehta said, "In the last three decades, we have achieved about 6 to 6.5 per cent on an average GDP growth rate and if we have to create a 10 million jobs every year, then we have to cross this chasm between 6 and 6.5 per cent and 8 to 10 per cent. The potential of the country is there and that would, forget $5 trillion, in the next 12 to 15 years we could be on the cusp of becoming a $10 trillion economy”.

Speaking on "renewing the economy", he added that the country must reach a virtuous cycle of growth. To achieve this, the country must "dream big, think big and act big".

He emphasized, "We have to reach a stage, where we get into a virtuous cycle of growth, where investments happen or really it starts with demand. The demand goes up, investment happens, livelihoods get created and then the virtuous cycle starts moving. So, we have to get to that stage".

Talking about the country's Covid-19 situation, he said an economy of $3 trillion is like an Airbus A380 aircraft and should not be allowed to go into a free fall.

On economic recovery, Mr Mehta said that deciding the acceptable level of interest rate to boost growth is a key question.

"Now we have come to a very critical juncture, where the question is how much the interest rate should be brought down to give impetus to the economy.

 

He said, "Second is how aggressive the government should be with the fiscal deficit. There would be a glide path to bring it down in the future in a very disciplined, open and transparent manner so that it gives confidence to both the investors as well as rating agencies”.

On health infrastructure, he stated that it is a wonderful opportunity to invest. He said, “If you look at beds per thousand, we are anywhere one-fifth or sixth of the more developed nations... Pharma industry is about $41 billion and we have around 3 per cent of the global pharma industry. This is a great opportunity to start looking to solve this problem".

A second focus should be on agriculture, as 60 % of the population lives in rural India and 50% are working in the agricultural sector, he said.

"I am pleased with the government with the steps which they have taken to reform some of the archaic laws which existed into the country. They are absolutely in the right direction. That is the kind of focus we need to bring here," he added.

He also proposed that the entire economy be digitised and data be considered a national asset.

"We have to bring down the cost of capital also by 330 to 400 bps at least. We have to bring down the cost of logistics and make land available," he added.

Mr Mehta said, speaking about the FMCG segment, the severity of the lockdown faced by urban India did not percolate to the rural areas.

In addition to taking initiatives such as the distribution of food grains and the direct transfer of money to the poor, the harvest has been strong this year and the government has also increased the allocation to the rural job guarantee scheme, he said.

He claimed that it has given rural consumption a boost. Rural consumption had slowed down before Covid-19. Rural intake of FMCG per capita is less than half the national average. So, the road to growth in rural India is huge, and if things are good, then the rate of rural growth is between 1.5X and 1.7X above the rate of urban growth. He said, “it is very visible now that the rural growth rates are higher. The issue for us is the urban growth rate”.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.