Increased spending on infra will give a multiplier effect to rejuvenate the aggregate demand in the economy.

Sanjay Aggarwal

President, PHDCCI

Indian economy is going through rough seas since the past couple of years due to various reasons. Last two years have been like a rollercoaster ride, thanks to the Covid pandemic. Are we already seeing some green shoots? How optimistic are you about the USD 5 trillion growth target? Tell us about the overall view on the construction and infrastructure sectors.

During the last few years, the Government has undertaken a plethora of reforms for each and every segment of the population to strengthen the key economic indicators of the country and make it one of the strongest economies in the world. These reforms include Make in India, Jan Dhan Yojana, Digital India, Start-up India, Launch of Smart Cities, Doubling Farmers' Income by 2022, Demonetization, Ayushman Bharat, 12 Mantra Package for MSMEs, Insolvency and Bankruptcy Code, Bharatmala, Swachh Bharat, implementation of GST and  historic clarion call for Aatmanirbhar Bharat. The Economic growth has been impacted due to covid induced lockdown in many States; labour shortage; skyrocketing price of commodities; and depressed demand scenario. In the second wave of coronavirus, the demand was heavily disrupted unlike last year, where demand was retarded only for a period of 2 months. The reason for this can be attributed to the spread of second wave of Covid to urban areas, metropolitan areas, small cities and rural areas. Further, the economy activity and spending had diminished as households shited their savings towards fulfilling the medical needs of their family members along with deferment of their expenditure on non-essential items.

On the back of supportive government policies, strong business confidence, positive consumer sentiments and anticipated high demand amid upcoming festive season, the lead economic and business indicators are expected to improve in the coming months. At this juncture, there is a need to further fuel the drivers of household consumption and private investments to enhance the aggregate demand in the economy as it will have an accelerated effect on expansion of capital investments in the country. The Government should frontload the National Infra Pipeline expenditure as increased spending on infrastructure will give a multiplier effect to rejuvenate the aggregate demand in the economy. Undoubtedly, robust growth of infrastructure is the key ingredient to realize the vision of Aatmanirbhar Bharat. The National Infrastructure Pipeline will provide a significant boost to the Atmanirbhar Bharat mission in building a world-class infrastructure and attain the vision of a USD 5 trillion economy by 2025 in an inclusive and sustainable manner.

The government had announced the ambitious Rs 20 lakh crore package amid the peak of the pandemic last year. Its already been a year now, did you see any positive impact of its implementation and to what extent? In the meantime, the government has also announced Rs 100 trillion infra plan. How do you see these developments fueling the growth engine?

In May 2020, Prime Minister Narendra Modi gave a clarion call for Aatmanirbhar Bharat and put forward the importance of becoming a self-reliant country to fulfill the dream of making the 21st century belong to India. In a graded manner, the government rolled out various relief packages for different sectors under Aatmanirbhar Bharat 1.0, 2.0 and 3.0. This has laid a road ahead for India towards realising its mission of 'Make in India' and become a global superpower. Infrastructure development has always been a vital component of economic growth, productive investments, job creation, and poverty reduction in India. The availability of modern and facilitating infrastructure is a very important requirement for the growth of industry.

Infrastructure development has always been a vital component of economic growth, productive investments, job creation, and poverty reduction in India. The availability of modern and facilitating infrastructure is a very important requirement for the growth of industry. The Pradhan Mantri Gatishakti Bharat Master Plan is aimed to have interconnectivity between road, rail, air and waterways for reducing the travel time and improving industrial productivity. The increased spending on infrastructure will give a multiplier effect to rejuvenate the aggregate demand in the economy. Undoubtedly, robust growth of infrastructure is the key ingredient to realize the vision of Aatmanirbhar Bharat. Furthermore, the infrastructure growth will create more employment opportunities for the youth of the country.

Private sector has been shying away from making large investments across key growth driving sectors. Interestingly, most of the programs announced by the government are intended towards bringing back private investments. What is your take on the same? By when do you expect the private sector to come back or will the dependence on government spends continue for few more years? What are the challenges faced by them?

Amid the daunting impact of COVID-19, businesses had cut back on investments due to muted demand in the economy, supply chain disruptions and uncertainty about future earnings. However, the Government has been taking various measures and reforms in the last many quarters to bolster private capital and investments in India. Also, with the decline in new Covid cases, gradual unlocking in many parts of the country and improvement in the key economic and business indicators, the business confidence has improved and green shoots are visible in the economy. There has been some positive progress in terms of economic growth, consumption and investments in the recent months and we expect this trend to continue in coming months as well.

In the last few months, India has created many unicorns, startups with significant amount of investments and it is likely that many more startups will be created or existing ones will get investment boost before the calendar year is out. At this juncture, a virtuous combination of public and private investment can ignite a shift towards investments and thereby lead to a high and sustained economic growth trajectory. This would in turn help India to position itself as the fastest growing economy in the world. Going ahead, there is a need for further calibrated measures to fuel the drivers of household consumption and private investments to enhance the aggregate demand in the economy as it will have an accelerated effect on expansion of capital investments in the country.

Your take on the National Monetisation Pipeline and how it will give a boost to the economy?

The National Monetisation Pipeline (NMP) launched by Hon'ble Finance Minister Smt Nirmala Sitharaman is highly appreciable as it has a great potential to balance the fiscal equation as well as support infrastructure creation in the country. This will unlock government investments in public assets and will also bring efficiencies through infusion of private capital, technology and best management practices, thereby further boosting productivity and rejuvenating economic growth. Besides this, setting up of an asset monetisation dashboard will lead to efficient tracking of the progress and provide clear visibility to the investors for potential investment opportunities in the country.

Also, given the current scenario where global ratings agencies have maintained a negative outlook for India, how do you see the prospects of India as an investment destination? Also, do you expect the abolition of retro tax will strengthen investors’ confidence?

India has registered a growth of 168% in FDIs inflow between the period of April- June 2021-22 as compared to April-June 2020-21. Healthy flow of FDI into the country has confirmed India’s status as a preferred investment destination among global investors. The government’s significant policy measures has kept the reform momentum intact by liberalizing FDI norms in many more sectors, streamlining ease of doing business reforms, among others. This has reinforced the faith of global investors in India’s growth story.

The decision of the government to put an end to retrospective taxation is highly appreciable and encouraging as it will result in significant reduction in tax disputes in the country. The move will bring in much clarity by eliminating a key source of ambiguity in tax laws. The end of the retrospective taxation will spread out as a positive message to the global investor community in terms of India's constant intention to improve the ease of doing business. It will directly result in attracting more foreign investments as a result of establishment of an investment-friendly business environment, thereby accelerating India's economic recovery from the impact of pandemic Covid-19.

India has embarked on the “Aatmanirbhar Bharat” mission with a clear emphasis to grow locally to become a global superpower. What are the challenges and opportunities that lie ahead before the India Inc. Also, given the current geopolitical scenario, do you see India emerging as a strong self-reliant economy?

Aatmanirbhar Bharat mission is committed towards integrating India into global supply chain and strongly positioning the country in the world economic system. Through its focus on five pillars, namely, economy, infrastructure, system (technology-driven arrangements), vibrant demography, and demand, Atmanirbhar Bharat Abhiyaan lays strong foundations for improving the quality of everything that the country produces from education to local goods produced by Indigenous industries. This will help India to produce the world class products and use this strength to capture a significant market share in the world.

Aatmanirbhar Bharat mission lays a perspective of reforms in growth-critical sectors of India to make the country competitive and attractive. This aggressive push to make India self-reliant is opportune for global companies to take advantage of policy reforms initiated by the Government in the areas of manufacturing, infrastructure, digital space and healthcare. To overcome the challenges for India, Inc. it is essential to revive aggregate demand, private final consumption expenditure and spendings by providing employment and income growth.

Which are the segments according to you that will drive investments? Kindly share with us the outlook of the sector and India’s growth prospects by 2025.

Various segments such as digitization, health care facilities, logistics, transportation, infrastructure, edtech, etc will drive the investments in the coming years. India has witnessed more than 20% of growth trajectory with low base effect in the first quarter of FY 2022 and a double digit growth is expected in FY 2022. India remains an attractive investment destination as net foreign direct investment (FDI) flows registered a growth of 168% in FDIs between the period of April-June 2021-22 as compared to April-June 2020-21. India's growth prospects by 2025 would become more visible and promising as the economy is expected to attain a size of USD 5 trillion economy by 2025-2026.

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