18 to 20 months before the economy recovers: Kumar Mangalam Birla at HTLS
“The government has taken many steps but we need a stronger fiscal stimulus. if GST is brought down by 15%, that would be a huge stimulus,” Birla said at the Hindustan Times Leadership Summit.
Kumar Mangalam Birla, chairman of the Aditya Birla Group, on Friday batted for a government stimulus for corporate India to boost a sagging economy and advocated a lower goods and services Tax (GST).
“The government has taken many steps but we need a stronger fiscal stimulus. If GST is brought down to 15%, that would be a huge stimulus,” Birla said at the first day of the two-day 17th Hindustan Times Leadership Summit.
“India can do with more that corporate tax cuts. Its gives more elbow room,” he added.
Read live updates from 17th Hindustan Times Leadership Summit here.
Birla insisted that “the animal spirits are always there in India” but with the Indian economy slowing down to 4.5 per cent in the second quarter of the current fiscal it could take at least a year and a half for it to recover. On Thursday, the Reserve bank of India cut the gross domestic product (GDP) growth forecast for the current fiscal to 5% from 6.1%.
“It could take the Indian economy 18-20 months before it improves,” the head of the $48 billion Aditya Birla group said.
Birla also backed the government’s decision not to join the Regional Comprehensive Economic Partnership, or RCEP, to protect India’s interests. “There are clauses against India in RCEP and I don’t see a reason why we should stand with it. I commend the government on its decision [on RCEP],” he said.
India had pushed the other 15 nations in RCEP to address its concern over deficits and open their markets to Indian services and investments at a summit in Bangkok last month.
He described the global economic scene as “sombre” and that it is unclear how the China-US trade war will play out. “The global economy is in a sombre mood… It is more than a trade war. No parallel to the US-China trade war in history. It is a war for global economic supremacy. History has no parallel to indicate how it will play out,” Birla said. “We seem to be moving away from globalisation to regionalisation.”
Under Birla’s leadership, the Group has made 36 acquisitions in 20 years in India and globally, the highest by an Indian multinational in India. But further global acquisitions will depend if they add value, Birla said.
He also said that the Aditya Birla Group will let its telecom joint venture with Vodafone opt for insolvency if it doesn’t get any relief on the adjusted gross revenue (AGR)-based dues of over ₹40,000 crore.
“We will shut shop if we don’t get relief, it could be the end of the story for us. There is no company in world that could get that kind of money in three months,” Birla said.