India is poised to be the fastest-growing major economy in the world and an engine of global growth despite global headwinds, says leading industrialist and Aditya Birla Group Chairman Kumar Mangalam Birla.
The economic activity in India has witnessed a sharp recovery to pre-pandemic levels on the back of a rapid and widespread rollout of the vaccination programme, Birla said in the latest annual report of UltraTech Cement Ltd.
"A strong digital ecosystem, fiscal and monetary policy and various government schemes helped small and medium enterprises and the worst affected sections of the population to survive while reviving demand and bringing the economy back on track," said Birla while addressing UltraTech's shareholders.
On the global economy, he said it had recovered from the pandemic shock in 2022 on the back of supportive fiscal and monetary policies and mass vaccination programme.
However, at the end of FY22, the war in Ukraine and the subsequent economic sanctions on Russia posed a huge shock.
"It disrupted energy markets and supply chains and added to the already evolving inflationary pressures and concerns over consumer demand," said Birla.
The Indian economy has not remained unscathed by these global developments, he added.
Partly on account of the elevated commodity prices in global markets, India’s inflation pushed higher than the target of the Reserve Bank of India (RBI). To control inflationary risks, and reduce the pressure on the rupee, RBI has been selling reserves and unwinding the extraordinary liquidity support provided by it during the pandemic.
"On the positive side, economic activity in India has witnessed a sharp recovery to pre-pandemic levels on the back of a rapid and widespread rollout of the vaccination programme," he said.
Even as the global headwinds are being felt, India’s growth recovery is progressing well, and most estimates peg economic growth at around 7 per cent in FY23, Birla said.
"India, therefore, is poised to be the fastest-growing major economy in the world and an engine of global growth," he added.
India’s exports are exhibiting a strong buoyancy, and economic sentiment has been supported by a robust pipeline of infrastructure projects as well as the government’s pragmatic policies, such as the production-linked incentives schemes, he said.
"Many industries have witnessed fresh project investment announcements. Foreign direct investment flows have remained strong. The burden of non-performing assets in the banking sector seems to have peaked out and is easing," Birla added.
Besides, dynamism in India’s digital ecosystem, diversification of global supply chains away from China and the greater emphasis of investors on sustainable finance offer new opportunities for India.
These "trends lend confidence to a robust economic narrative" for India in the medium term, which augurs well for the corporate sector as well, Birla added.
On the world economy, Birla said growth forecasts have been slashed.
"The International Monetary Fund (IMF) now expects the world economy to grow by 3.6 per cent in CY22, which is 0.8 percentage points lower than its pre-war projections," he added.
Many economies have experienced a sharp surge in inflation recently, particularly in food and fuel prices, taking their inflation rates to multi-decade highs. Central banks have been forced to respond to surging prices with aggressive rate hikes.
"As the stance of monetary policy shifts, there is greater turbulence in currency markets. The dollar has strengthened, while emerging economies have witnessed downward pressure on their currencies," he said.
Global supply chain disruptions due to pandemic-induced lockdowns have been replaced by new disruptions caused by the war in Ukraine and the economic sanctions.
While talking about UltraTech, Birla said in FY22, it recorded net revenues of Rs 52,599 crore ($7.1 billion).
He further said the Indian cement industry will add 80-100 million tonne capacity by FY25, driven by increased spending on housing and infrastructure.
On expansion plans of UltraTech, Birla said it is investing Rs 12,886 crore towards increasing capacity by 22.6 MTPA (million tonne per annum).
"Upon completion of the latest round of expansion, your company’s capacity will grow to 159.25 mtpa, reinforcing its position as the third largest cement company in the world, outside of China," he said.