India Inc has entered a trajectory of growth, which necessitates sharing of prosperity amongst the economically underprivileged, to ward off political and social backlash, according to Sunil Kant Munjal, Chairman, Hero Corporate Service Ltd.
Delivering the CEO lecture organised by the PHD Chamber of Commerce and Industry in Delhi, yesterday, Munjal said, “Social awareness and affirmative action by the India Inc are not only an expression of corporate social responsibility but also an articulation of the enlightened self-interest since distributive justice is the cornerstone of societal progress”.
Munjal said that India would continue to enjoy the demographic advantage for several decades in view of the young population, whereas China would lose this advantage sooner or later in view of the steeply falling fertility rate and its onward march to become a developed country. “India could continue to be the most sought out hub for outsourcing in view of the abundant supply of skilled labour force, while the developed countries are facing acute shortage of manpower,” he said adding that “labour arbitrage, which India presently enjoys may not be there in the long run, in view of the steadily rising wage rates across the spectrum. Sustainability of growth is dependant on imparting right skills to the masses. Also, wage advantage has to be seen against a number of imponderables like productivity, share of wages to the total cost etcetera, he added. Though India enjoys labour arbitrage in relative terms, its productivity is very low and share to the total cost is significant.”
Mentioning that there are a great degree of complementaries between India and China, he said, “We should not be wary of her (China’s) progress, but should build synergies and connectivity, wherein the progress is shared between the two countries”. On the FDI front, a paradigm shift is taking place in India. Not only is India attracting more FDI than in the previous years, but it is also emerging as a major investor in other countries, such as Britain and Singapore, where India has been adjudged as the second largest investor, a meteoric rise from an obscure position in the recent past. “ That is a benchmark of greater degree of globalisation of Indian economy and its effort to emerge as an economic power house of the 21st century,” he opined.
Munjal said that while Indian economy is increasingly getting integrated into the global market and is growing at a speed and velocity, much beyond the predictions, it is important to review the rules, regulations and policies that are governing the India Inc. The Government should increasingly occupy the role of a facilitator of business and should vacate from operating the businesses. “The roles of an operator and regulator are different from each other and there should be strict separation between the two. We have made good progress in separating the two in many sectors like telecom, insurance etc, but more has to be done in this direction,” he added.
Mentioning that the economic history of the US is marked with various stages of development such as focus on rail road, building electronic infrastructure etc, Mr Munjal said that for India, happily, these two stages of development are unfolding together. There is an unprecedented focus on physical and digital infrastructure in the country, which would give a critical push to the development efforts in the coming years, he added.
On a query from Sanjay Bhatia, President, PHD Chamber as to what would be the development priorities for the country in the future, Munjal said that the segments, which hold promise now might not have future business prospects. Many extraneous factors would come to play in deciding the competitive edge of the Indian industry, such as possibility of hardening wage levels, an appreciating rupee etc. Businessmen should gauge these variables before embarking on new businesses. He said that food processing, aviation and infrastructure segments which can ensure a larger return on investment were those that hold promise in future for India Inc. In this regard, he pointed out that commodity trading through organized exchanges would score over the scrip trading in India, as is the case in most of the developed countries.
