PM Modi Should Work Like CM Modi To Revive Economic Growth: L&T’s AM Naik
India Inc. veteran AM Naik went public with concerns over the economy, saying we should feel "lucky" even if GDP clips at 6.5 percent. He recommended faster project clearances like the one in Gujarat when Prime Minister Narendra Modi was the chief minister, as a solution.
The Padma Vibhushan awardee also said the "situation is challenging" on data credibility, saying one has to use her own judgement while believing in the official numbers.
"Growth is going to be not more than 6.5 percent this year. My feeling is that though they (government) claim it is 7 percent plus, if we can maintain 6.5 percent, we will be lucky," Naik, the non-executive chairman of the engineering giant L&T told reporters on the sidelines of AGM Thursday.
The comments come at a time when economy slipped to a five-year low of 5.8 percent in the March quarter, and questions are being raised on the methodology of assessing the very official growth numbers by a group of economists.
Naik said the lingering trade wars between U.S. and China present the domestic economy with a huge opportunity, if we are able to attract the units leaving China. However, he rued that India has not been able to make any success on that front as those companies have already chosen Vietnam and Thailand.
"How many industries have come here? For the past two years, the U.S. has been talking of moving American industry out of China, but we were busy in the elections. So, we did not do anything," he averred.
Naik, who is widely credited for the huge success of L&T as the executive head till two years ago, said it will be a "great achievement" if we can attract a fourth of the investments moving out of China.
Urging the government to speed up decision-making, he said "a lot of openness and reform is required" and one can't take "years to clear an investment proposal.
Citing the example of how Modi as the Gujarat chief minister made his officials work overnight to ensure a smooth sailing for the Tatas to shift their auto plant to the state from the trouble-torn Singur in Bengal.
"When the Tatas had come with their motor plant, for three days officials stayed in the office. But in one week, all the permissions were given. Now, we can't do it, but you can't take years," Naik said.
To a specific question on what the private sector can do on this, he said they have only limited capacity on this.
"Private sector is in challenging time for them to make investments," he said, pointing to the high non- performing assets of over Rs 4 trillion that corporates are saddled with.
In what aggravates the situation, Naik hinted that there is too low demand for goods, which is making it difficult for them to pay back the loans. All auto companies are in distress now, he said, and pointed out that the largest carmaker Maruti Suzuki has had to cut down production massively for the fourth month in row last month.
When asked if consumption is the worry as is being pointed out by the official data, Naik retorted: "Where is the liquidity, where is the money? Lots of promises were made during the elections, and you have to fulfill them now."
Lauding the government for ease in doing business, he said, a lot of what is ailing the country now is a legacy of the past governments.
"I am cautiously optimistic," is what he proffered when sought his outlook on the economy. He said it will take up to 18 months for the government to accelerate public spending for faster development.
L&T has been able to withstand the pressures by diversifying its revenue base to overseas markets which contribute 37 percent of its topline now, Naik said.
Naik said the company will appoint a new management team for Mindtree, which it acquired recently, Friday.
He did not offer any comment on a question on tax terrorism and also the alleged suicide of Cafe Coffee Day founder VG Siddhartha.