Growth only weapon against unemployment, says Adi Godrej

Growth is the only weapon that can solve several problems like employment in India. In an interview, Adi Godrej, chairman, Godrej Group, talks about the things the new government post elections should do in terms of policy. During an exclusive chat with Swati Khandelwal, he also spoke on the steps the government should take to boost growth, as well as job creation through skilling India. 

Excerpts:

In terms of policy suggest things the new government should do after coming to power?

The new government should concentrate on growth, as it can solve many problems including employment opportunities. Growth can also bring improvement on other factors too, which can increase global attention towards India. Currently, India is well positioned for growth and global investment, a factor that can help in setting up new factories and in turn generate employment opportunities.

For a growth-oriented focus, what steps should the government take?

Government interference should reduce. For instance, permissions take time, which at times gives birth to difficulties. So, permission and taxation should be brought down. My decades-long experience suggests that low rates of taxation give a boost to tax collection while it goes down when high rates of taxation are enforced. Tax collections were too low when taxes were too high. So, I feel, taxation should be planned well. Besides, if you have a look at corporate taxes, you will find that India is the country where the highest taxes are slapped on big corporates. On the other hand, China slaps lower taxes on their companies. Thus, concentration on these issues will help in boosting the pace of growth in the country.

GST has lowered taxation to a certain level, but the corporate rates are still an issue. Do you think the government will bring down in the near future?

I hope it, but don't expect that it will happen soon.

Do you think the 25bps rate cuts by RBI will give a boost to growth or are there any concerns related to it?

Inflation has been kept under control which is a good thing. I feel that they can still reduce it (rates), but the banks should pass on the benefits to its consumers. However, the banks are facing bad debt problem - there is a need to neutralise these debts - and that's why they are not transmitting it to the consumers.

Banks are facing the problem, and it's a status quo for everyone?

Yes, it does exist, but the RBI should suggest ways to banks to transmit the benefit to customers.

If seen from the macro point of view, do you think the rupee and crude levels are comfortable for India? What is your outlook on it?

Most macro-factors are good for India but the same is not happening with the global macro-factors, which can have an impact on India. I think a pick-up in the global economy by finalising the China-US trade agreement and other macro-economic factors, which are being talked about, will give a boost to the Indian economy too.

Will the geopolitical concerns and its risks, like Brexit and US-China trade issues, will have an impact on India. If yes, then at what level?

Yes, it can have an impact on India, as well. In fact, there are people who think the global economy will be hit by recession and, if it happens, it will have an impact on the Indian economy. Interestingly, the Indian economy is consumer-centric. In short, it is consumption-led and, therefore, it will have a minor impact on the Indian economy.

When it comes to India growth story than there was an expectation that we will grow and continue with the consumption-led story, but it didn't happen in true sense. Talk about the factors that will spur demand in India?

The policy is the most important factor as it will have a major impact. Thus, the government should come up with good policies and it must not be a short-sighted one. When it comes to the monsoon, it seems to be a good one this time and the previous talks of El-Nino effect have been put down and it seems that it will be a good one for India.

Suggest immediate policy intervention that is needed at this point in time to encourage demand? Also, pinpoint the factor that is hindering growth in demand?

Uncertainties in the global economy and Indian policies are responsible for it. Demand never goes up under uncertain conditions. I think these conditions will come to an end after the elections are over.

What is your vision for 'New India'?

In my vision, India's economy will be very good in future. India has turned out to be the world's third-largest economy in terms of Purchasing Power Parity (PPP). China is number one and the US is number two economy and India that overtook Japan in terms of PPP is the third country. Apart from this, in terms of population, India will turn out to be the world's most populous country in the next 6-7 years leaving China behind. The decline in China's population will have an impact on its growth and this may help India to increase its GDP in terms of PPP. And, I expect that India, by 2050, will turn out to be the world's largest economy in terms of PPP, overtaking the US and China respectively. The US will be left behind by 2030-2040 and we will overtake China between 2040-2050. India will be able to attract the world by turning out to be the world's biggest economy in terms of purchasing power parity.

What is your vision on future jobs in India?

There are jobs but there is an absence of trained people in the country and those who are not skilled face difficulties in getting jobs. For instance, there is a lack of doctors, nurses, boiler operators and skilled construction workers in India. So, attention should be paid on skilling and training of people. At the same time, there is a need to pay attention to the education system prevalent in India, it should be made more relevant. So, by paying attention to these factors will help in creating a skilled workforce, which in turn will end the problem of job shortage in the country.

Any initiative from corporate India to skill people?

We have a budget for it. In fact, a part of our CSR budget and the company's budget is invested in skilling and training people. The budget is utilised in training and skilling unskilled people who have been hired by us. The issue emerges in case of medium and small-scale industries.