India’s gross domestic product (GDP) growth will be 6.5 per cent this year, and accelerated spending is unlikely to happen in the next 18 months, according to A M Naik, chairman of Larsen & Toubro (L&T), the country’s largest engineering conglomerate.
“Growth is going to be not more than 6.5 per cent this year. My feeling is that though they (government) claim it is 7 per cent plus, if we can maintain 6.5 per cent, we will be lucky,” said Naik at the company’s annual general meeting on Thursday. “I think the government knows the economy is slowing.”
He added: “It is going to take a year or a year and a half before accelerated spending for development comes.” He said he was cautiously optimistic about this estimate.
On the debt burden of Indian companies, Naik said: “The private sector is in challenging times in terms of investment; only one third is able to keep what they have. A number of companies now need to sell what they have to repay debt.”
He doubted the data on the capacity utilisation level for industry the Reserve Bank of India (RBI) has been quoting.
Naik questioned the veracity of data points and statistics on India’s economy.
“The situation is challenging …How much to believe what the government is saying … it is a judgement that one has to make and decide … that is what we are doing at L&T.”
Naik added India had so far not been able to capitalise on opportunities arising from the US-China trade war. “In the trade war between the US and China, a number of industries have shifted to Thailand and Vietnam, but why not to India?” he asked.
“For two years, the US President is talking about moving industries out of China … how many have come to India? We were busy with elections, (and) we did not do anything, (but) we should do something now,” he added. Naik said the government should now keep its promises made during the elections. The chairman said the prime minister should replicate his earlier Gujarat model to expedite clearances for industry.
“There should be a special desk to clear all industrial permissions. A lot of openness and reforms are required,” he said.