NSS - Jan 18

India is in a sweet spot in terms of economy when compared with other countries

globally, Nadir Godrej, the CMD of Godrej Industries said in an exclusive conversation with

Business Today TV's Managing Editor, Siddharth Zarabi at the World Economic Forum in

Davos.

He said while the rest of the countries have experienced shocks during pandemic, India

has survived it reasonably well. “China seems to be suffering from a lot of problems.

Some of them seem to be associated with the very autocratic kind of rule that we now see

in China. There seems to be less feedback mechanisms and China has slowed down, and

that itself has given us an opportunity,” he said while comparing India with China.

He further mentioned that supply chains were disrupted in China and that became for

India to thrive. The global political crisis had not affected India very badly. “But this is

something we will have to watch out for if the Hamas Israel conflict expands to a major

extent or if things happen in Taiwan, the global situation could be very serious and India

might get affected,” he added.

“We have capitalised a lot with whatever China has offered to us on platter,” Godrej said.

However, he added that China has the capability to bounce back and that can never be

underestimated. “We should only focus on the opportunities we get from their

shortcomings,” he said.

Global Inflation

On global inflation’s effect in India, Godrej said, “Many people expected that global

inflation shock is moderating, but there are no clear signs of it as of yet in the latest

numbers from the US are not all that promising. It's still possible. Many people expect US

interest rates to fall. I think the Reserve Bank will be even more careful. Indian inflation

has stabilised, but it's not really coming down. And surprisingly, the rupee has been very

steady at around 83 and I sincerely hope that the rupee will stay that way.”

He cheekily pointed out that several people in India appreciate the weak rupee without

knowing that it is the major cause behind rising inflation.

Real Estate

On the real estate scenario in India, he said, “The real estate cycle seems to be going on

very well. It's partly due to the very good Indian economic growth. The growth is a little

bit more on the higher level side. That's why the premiumisation at the same time, will

continue, at least for some time and at the same time after the pandemic, back to the

office movement seems to be quite strong in India, so office space is also in demand. It is

possible that there will be more hybrid working, more flexi working. But most companies

seem to want people to come back to work, so that will help the office space market.”

He further hoped that the low cost housing segment would pick up soon. “And maybe

when the premium market levels of the low cost market will take a look up. And we as

real estate developers, developers must look at all markets. Of course, the premium

market is remunerative, but we must strive to do better,” Godrej said.

Godrej said that land rates are certainly going to increase unless FSIs rise due to shortage

of urban land in India. “FSIs are definitely an issue in Mumbai and Delhi-NCR as it is much

more restrictive. Other cities can expand geographically, but then often they have very

bad traffic problems,” he added.

Interest Rates

On the interest rates, Godrej mentioned that, “I think real interest rates are very

reasonable in India, and they shouldn't be extremely low there.

About 2 to 3% and the RBI will track it. I won't be in a hurry if inflation falls rapidly and

the RBI is a little slower. Real interest rates may go up slightly, but it's better than the RBI

playing it safe. We should look for low interest rates only when inflation comes down. And

we shouldn't obsess about nominal interest rates.”

On elections in 2024 affecting broader economic trends, Godrej said elections can spring

surprises and there is a global trend of less liberal democracy which is seen in several

countries.

“ And if any country loses its democracy, or its democracy becomes an electoral autocracy

rather than a true democracy where opposition and ruling party can come to a consensus.

This is a big danger for the world, and we don't know what consequences it will have. And

if it leads to any wars with massive geopolitical problems, then of course we will see a

slowdown. And if it leads to a nuclear war, things are going to be bad. Also, if it means

that we take less action on climate change, that could be a problem for the whole world,”

he added.

On what is affecting the agriculture sector, he said, "One of the problems is climate

change is affecting agriculture pretty badly. The other big factor is the government is

doing a lot of positive things. The oil palm policy is something that's going to have a huge

impact. We have an oil palm business and we have made it into a very sustainable oil

palm business."

Ref: Business Today