The Hindu Business Line : Boost domestic demand: Bajaj

Pune, Dec. 26 Exports are definitely going to be down for most industry sectors in 2009 as compared to 2008, and immediate measures need to be taken to boost domestic demand so that in totality the year to come is not worse than the current one, industrialist Mr Rahul Bajaj has warned.

“Till now, exports have not been hurt except may be in garments, textiles and handicrafts. Automotive exports have not been hurt, and we (Bajaj Auto) have till now seen 30 per cent growth on this front. However, exports are definitely going to be down for most sectors in 2009,” Mr Rahul Bajaj, Chairman of a clutch of Bajaj Group companies, including two- and three-wheeler major Bajaj Auto, told Business Line.

“The world is hurt, we are hurt in India. Countries we export to in Asia, Africa and Latin America are also likely to be. Extent may be less or more. I wish they are not hurt; but that is wishful thinking,” he argued.

The first six months of this year were not bad at all, Mr Bajaj pointed out, adding that with exports taking a hit, for most industries, 2009 will be worse off than 2008.

Only answer

Under the circumstances, the only answer lies in developing the domestic demand, Mr Bajaj said adding, “We have a population of 100-200 million who can afford to buy certain things. So give them credit, on a sensible basis, at a reasonable cost of interest. I am saying reduce repo rate by a further 1 per cent, cut reverse repo rate by another 200 basis points, so that the banks are not attracted to park their money with the RBI.”

The second measure the government needs to take is to spend on infrastructure such as roads, power, ports over and above what it was already planning to spend. “This is not like digging a well and then filling it up which generates employment but doesn’t add assets. This way, the country gets infrastructure, the employee gets spending power, there is more demand for industrial products, hence more production….better growth.”

“This has to be done immediately,” Mr Bajaj emphasised, adding that there was several projects that can be quickly jacked up. “I can’t quote them here, but they know it, at the Planning Commission and the Ministry of Programme Implementation,” he said. And added, “Let us ensure that with the right decisions, a lower export demand can be offset by domestic growth so that in totality, 2009 is not much worse than 2008.”

Small car on track

“The small car project – it could be with Renault, it could be our own - is still on. We have not shelved it. Whether our design, or their design, you should ask Rajiv; but it is likely to come by middle of 2011.”