RPGCOM :: October 2009
Keynote
On the growth path, cautiously
Dear colleagues:
I am writing at a time when the world continues to be in the grip of an unprecedented economic slowdown, but also at a time when our country has taken a bold step to speak out against the policy revision envisaged by some developed countries.
The speech delivered by our Prime Minister Shri Manmohan Singh at the recent G-20 summit pointed out that the developed countries would be acting in haste if they felt the recession was over and adopted steps based on the assumption that economic activity has picked up.
Businesses in India continue to be affected and there is no room for slackening of our efforts to improve productivity, to cut costs and to persist with investment-led economic growth in these difficult times.
In other words, the business environment is far from ideal and so when the US Fed says economic activity has 'picked up' as late as September 23 – that is a little hard to accept.
When the Federal Reserve adds that it would leave interest rates unchanged at a range between zero and 0.25 per cent as part of its easing cycle in monetary policy history, we have reason to be worried.
The environment continues to be constrained by ongoing job contraction, sluggish income growth, lower housing expansion, and tight credit.
The difficulty in export markets is far from over.
Economic activity may be levelling out in the domestic market, but there is little option for most businesses but to continue to examine every investment proposal and cost head.
Many sectors are still bringing inventory and stocks into better alignment with sales.
Unemployment remains a problem and while the Indian economy may continue to grow, the changeover from the recessionary phase to one of sustainable growth is some way off.
The outlook on inflation is far from stable and is another source of concern.
Support for our economy and implementation of strategies in a co-ordinated manner to combat the crisis should be our focus areas given the health of global financial markets.
India and China, by their own efforts, have helped the global manufacturing sector rebound and helped the v-shaped global economic recovery curve that we are witnessing today.
Our Group, I am happy to say, has contributed with our efforts to improve customer offerings, cut costs and improve productivity.
Here are a few examples.
In the power sector, the capacity addition plans of CESC through two 600mw plants at Haldia in West Bengal and Chandrapur in Maharashtra are on track, and it is close to commissioning a 250mw third unit at BudgeBudge near Kolkata.
Philips Carbon Black has expanded capacity, bounced back and looks set to have a good year.
Superior product mix and investments have aided Harrisons Malayalam emerge as one of the better-run companies in the plantations sector.
Our retail business is getting back on track thanks to better located and better stocked outlets, reduction in costs and a slow revival of consumer confidence.
Despite these indicators, I cannot but overstate the need to stick to a monetary and fiscal policy regime focussed on renewing economic confidence, thereby creating the enabling environment for industry to deliver the investmentled growth and employment generation.
Our group is aware of these and other challenges and I am confident we will achieve the targets we have set for ourselves in all our businesses
Sanjiv Goenka