India may be staring at a negative growth for FY21 with the first two months of the fiscal witnessing no activity because of Covid-19, CII president Uday Kotak said.
The growth for the current year, however, should be looked at ‘granularly’, in terms of the month-on-month improvements and not an average for the entire year, he said.
“In the current year, considering that we have had long lockdowns, April and May, estimates on the negative side may have veracity,” Kotak said in his first media interaction after taking over as CII president.
“However, how much negative, it is something which only time will tell and it also depends on how fast the recovery happens,” the veteran banker said.
Kotak said that growth will need to be measured in terms of indicators such as electricity consumption, traffic on highways, and their improvement every month.
“We need to see month by month, how growth is coming back, and that is what matters. I would not look at growth as an average for the year,” he said. “I would rather look at the trend line every month and every quarter. And I am reasonably hopeful, the trend line quarter after quarter should be up from the previous quarters numbers.”
“At this stage, considering the significant impact of Covid on the first two months of the year, I will be reasonable to assume that we may have an average which may be negative, but I would like to see trend growth getting to normalcy at the end of the year,” he said.
Most independent experts expect the economy to contract in FY21.
Unveiling CII’s theme for 2020-21 Building India for a New World: Lives, Livelihood, Growth, Kotak said that “healthcare, education and mother nature are out of the box thoughts that CII is committed to in this year of transformation.”
On the matter of interest waiver during the moratorium period, which has been taken to the Supreme Court, Kotak said that banks were only intermediaries between depositors’ money and the borrowers. “We can’t have a one-sided contract where we allow moratoriums on interest to the borrowing side and of course, banks have a fundamental obligation to pay principle and interest to the depositors,” Kotak said.
Talking of trade relations with China, Kotak said that Ïndia should be open to trade”with its neighbour but should protect its interest while doing so.
“We should be open to engaging with China which indeed is a solid global power today,” he added.
A statement issued by the industry body said that CII will work closely with the government to provide incentives and facilitation to companies wanting to shift their manufacturing operations out of China as part of their de-risking strategy.
News Source: Economic Times