Puri further says: “We have a core portfolio which, given the growing consumption in India and the opportunity for penetration, the opportunity for per capita consumption is huge, we are saying that we need to scale that up, use that to address adjacencies and also build categories of the future. Some of them start scaling them, some of them incubate them.”
Do you think India can sustain 7% growth?
Sanjiv Puri: Yes, this is eminently possible. That is the kind of number we should be aiming for at the minimum. You see, growing at 7% which is what is the estimate for the year and beyond this year, at a time when the whole world is struggling, when the global growth is the least in a long period, global trade is significantly lower than what it used to be at that time itself, we are growing at 7%.
I think it is quite a commendable achievement and that certainly gives us the confidence and the confidence is not emanating just from numbers. The business confidence is not coming just from these GDP numbers. It is reflected in the various CII surveys that have been happening with the business leaders on capacity utilisation and confidence and so on and so forth. As a result of this very strong foundation that is getting built over several years, a lot of very purposeful policy interventions have happened if we look at the macros.
Our inflation, for example, is very well managed. There was a time when we had higher inflation than the developed economies. Today it is the reverse. That talks a lot about the astute management of the macros in the economy, the public infrastructure, digital infrastructure, the investments and the incentives to start to make India into a manufacturing hub, I think all these augur well for the future. There is also focus on the agriculture sector, the FPO, bringing technology.
This budget talked about specific sectoral focus. Now, focus has been brought in on innovation. I think India is a powerhouse of services and we do have a demographic advantage. G20 has elevated India’s stature in the new geopolitical dynamic. India is the centre of attraction. It is very important from a supply chain diversification and it is only India that has the talent and the competitive operating ecosystem and the scale to be able to provide that kind of supply chain diversification.
We know that we have a lot of tourism assets, that is the new vector that we see from a policy perspective that is going to be pursued. We do see in the budget and whatever the Honourable Prime Minister also said yesterday that the commitment to making the policy framework better, dealing with some bigger ticket issues, the commitment and the intent is very much there. Considering all of this, it is a very good time for India. It is India’s decade and probably even beyond that. I see no reason why we should not be growing at least that number.ITC is Bharat itself from agri to hotel, from cigarette to FMCG to paper. Now post COVID, all kinds of nomenclature have been used to describe India and the rural economy. Since you are connected with the rural economy, could you connect the dots and share with us what is happening to the rural economy? If India is growing, why is the rural economy not growing? 20% of Indians are accounting for 80% of the consumption, but 80% of Indians still account for 20% of the consumption. If that does not grow, the base would be shaky.
Sanjiv Puri: It is a very good point you have brought out. The way to look at it is that the Indian economy and even rural India has been very resilient. Your question emanates from the fact that in the reported GDP numbers, consumption growth has not been as much as one expects it to be. But I am at one level quite reassured that the economy is resilient and it is growing after a spate of very serious challenges. It went through COVID. It went through a huge amount of inflation during the geopolitical crisis on account of that. It has faced the brunt of extreme weather events and we know there is a larger indexing to agriculture in the rural side. Despite that, it is resilient, it is growing, maybe not growing as much as we would like it to be and it is so because I think a lot of good actions have happened. You see the infrastructure that has been created, the connectivity that the rurals have got, the focus on housing, the focus on digitisation. I think the direct benefit transfer, the stuff like free food grain distribution are some of the very important steps taken in terms of the investment in the rural economy and that is why we are seeing that it is quite resilient.
Now, I see no reason why the growth rates will not progressively improve over a period of time. One or two good crop cycles and we will see the whole situation completely turn, because there is definitely a lot more potential there and I am quite optimistic that it is going to turn around sooner than later. A lot of actions are also being taken to help farmers mitigate the impact of climate change. It is not easy, but some steps are already being taken and all that I think certainly augurs well and it is certainly going to I think perform much better going forward than we have experienced in the recent past but in the backdrop of where we are, I think I would be quite reassured that it is resilient, it is fairly resilient and still continuing to grow.
6% to 7% GDP growth, I add the inflation multiplier that makes it 11% to 12% growth. ITC is always growing higher than the nominal GDP growth. So, can I assume that if India will grow at 6% to 7%, ITC will continue to grow at 14% to 15% at least?
Sanjiv Puri: I was not here for ITC specific question, but nonetheless, let me say that the aspiration is certainly that we should be growing much ahead of the rate of the growth of the economy and anything that is connected with domestic consumption very much doable and that is what very much doable growth rates. But there are pieces that are also connected with the global context so that is something to watch out for, that is in a way at least for now it is a dampener. But there is potential as far as the Indian economy is concerned and that is how we are looking at it and architecting our future.
We are preparing our portfolio of growth not only for today, tomorrow and day after. In our parlance we say that we have a core portfolio which, given the growing consumption in India and the opportunity for penetration, the opportunity for per capita consumption is huge, we are saying that we need to scale that up, use that to address adjacencies and also build categories of the future. Some of them start scaling them, some of them incubate them.
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