India can become a $ 10 trillion economy in the next 12-15 years: Sanjiv Mehta, Vice President, FICCI and CMD, HUL
NEW DELHI, 21 September, 2020: Sanjiv Mehta, Vice President, FICCI and the Chairman & Managing Director of Hindustan Unilever Limited gave his insights on the future of the Indian economy post COVID-19, in a special conversation with President, FICCI, Dr Sangita Reddy.
Dr Sangita Reddy: Namaste! Sanjiv, FICCI Fast Forward is our new and super exciting platform and we look forward to sharing insights, discussing thoughts and understanding what you think is the future- the future for the economy, the future for our country, and the future for humanity at large.
So, let’s begin with the topic that everyone’s been talking about. What is your understanding of how COVID-19 has changed the world? What is the kind of deep significant changes that we are to carry with us even after this pandemic?
Mr Sanjiv Mehta: Thanks, Sangita. I think this is the right way to start our conversation. Many people say that the COVID-19 pandemic is a ‘black swan event’.
I don’t agree, I would tend to agree with Friedman- that this is essentially a herd of stampeding black elephants. It is obvious that this is a crisis of huge magnitude. This is not just about an economic crisis; it is a health and a societal crisis too and it will have far-reaching implications for the world at large.
This could impact the global trade significantly. We are today talking about global trade, which at about $ 18 trillion, could possibly decline by 20 per cent. The other big impact that we’ll have is the exacerbating, deteriorating US-China trade relations, where the two-way trade valued at $ 650 billion, could possibly shift by about $ 100 billion. This big opportunity is waiting for a country like India to tap in.
Geo-political frictions also play a significant role. Unfortunately, even before the pandemic, the global multilateral organisations had weakened. This could also lead to a retreat of globalisation and I believe, it is not in India’s interest to let that happen.
From the consumer behaviour perspective, there are certain very clear discernible trends that I would like to reflect on. First, the COVID cocoon. There is a mass behaviour change on a scale we have never seen before.
The second is e-everything. From communicating, working, shopping, informing, educating; everyone is online today. Then comes the fetish for clean living followed by a contactless culture. Very clearly, people have become far more conscious about their physical, emotional and mental health.
And last but not the least, looking at the shape of the economy, people have become much more value seeking. These are some of the behaviours that are going to last much beyond the pandemic.
Dr Sangita Reddy: I think the only thing that would come out of that is a concept of preparedness. So, tell me, what are you seeing in terms of economic trends, economic opportunities? Give us some of your highlight points on the economic shift and the economic potential of the situation that we are in right now.
Mr Sanjiv Mehta: When you look at the GDP contraction of close to 24 per cent, it is of course very worrying. It is understandable because we went in for a very hard lockdown. India’s healthcare facilities were very fragile. So that gave a breathing space for the government and the society to beef up the health infrastructure. But unfortunately, the curve of the virus is still creeping up.
Over the last 20 years, over 20 per cent of the population has been able to move from the bottom of the pyramid to the lower middle class, so one of the biggest risks we see is that many of these people will again be pushed back to the bottom of the pyramid. The government must look at the poor and the marginal sections. There should be no Indian who goes to bed hungry. That should be the dream.
The second important bit is kickstarting the economy. I think this is the time where the government needs to press the bell, press the accelerator and take a risk. Also, we need to be much more aggressive with the interest rates of the country. Growth and inflation control must move in tandem. There is a risk of inflation, but the bigger risk is the economy going on a tailspin. Also, we must ensure that the MSMEs keep breathing.
Dr Sangita Reddy: What then, according to you, are the top three measures that you recommend? Also, if you could share with me your thoughts in the potential opportunity for macro-economic reforms.
Mr Sanjiv Mehta: Very importantly, the government must create the headroom to spend money. And the headroom will come from taking a very clear decision on the fiscal deficit. There is a curve of cost of doing and the cost of not doing. When the cost of not doing exceeds the cost of doing, then it would be a very unfortunate situation for the country. We should not let that happen; we should take the risk of being aggressive with the spending. Because if we don’t do it now, then it might become a bit too late.
We should dream of making India into a middle-income country. We have to cross the chasm from the 6-6.5 per cent, which we have delivered over the last 30 years, to the 8-10 per cent kind of growth that we need to deliver over the decade and a half to take India to a mid-income country. If we can successfully do that, we could very well become a $ 10 trillion economy in the next 12-15 years.
The few things that the country needs to do at this stage is to protect the people. This is a dream opportunity for us to become the affordable and quality healthcare capital of the world. Just like the Y2K crisis gave a fillip to the IT industry, COVID-19 could give a fillip to the healthcare industry.
The second is make technology a game changer. This is a brilliant opportunity for the country to wire up the whole economy. Technology could help completely change healthcare, education, could create new business models, jobs, etc. The opportunity is staring at us, we should grab it as a country. And we should be treating data as a national asset and not let it become like the walled gardens of the west.
Dr Sangita Reddy: I think not just me, but 1.3 billion Indians subscribe to your powerful vision. My one last question is what changes for you post COVID? What are you going to do differently, not as the chair of HUL, but on a personal level?
Mr Sanjiv Mehta: Something which worries me significantly is climate action. And my fear also stems from a fact that the pandemic might slow down the government-private sector investment towards controlling climate. We will get a vaccine for COVID but we won’t get a vaccine for climate action. We need concrete steps to bring down the climate curve, remove plastic away from the environment, and very importantly protect our oceans. And that is the reason why I have accepted to be the Co-chair of the advisory network of the Global Sustainable Ocean Economy. These are the areas where India should step forward. India cannot afford to have the per capita greenhouse gas emissions of the western countries. Ours will have to be a sustainable model and I think everyone has to do their bit to ensure that we make our country more equitable, fairer, more greener, more resilient and more adaptive.
Dr Sangita Reddy: So, not only vision of a financially strong economy but also with blue skies, clear oceans and a safe, and beautiful clean world. Thank you, Sanjiv for a fantastic conversation. FICCI is thankful for your time.