India is facing its most crucial elections this year in the back drop of slow economic growth where “if the results go bad, things can go very, very bad” or if good, the conditions can repair themselves faster than expected, according to Venu Srinivasan, Chairman and Managing Director, TVS Motor Company.

While not specifying what the good or bad results might be, he said depending on the outcome of the elections, the economic situation could improve or worsen. The rupee could depreciate against the US dollar to ₹75 or gain value to ₹50.

Since the high growth of 8-9 per cent up to 2009, India’s growth has dropped to well below 5 per cent and asset creation has hit a low of 2.5 per cent. For “India anything less than 5 per cent is recession,” he felt.

This estimate, he said, is based on current market demand and the industry “has not seen a slower year,” he said addressing the annual convention of the Madras Management Association on the theme India 2015: Restoring Confidence, Regaining Momentum.

Why will companies invest under such conditions? he asked.

With sustained inflation and lack of confidence in the way things were managed trade balance went bad. The problem of large investments in gold was just ‘flight of capital’ as gold is only imported. Sustained inflation led to slowdown and successive expenditure-laden budgets led to the deficit situation. Turbulence in economy is not new to the industry. But companies need to exercise ‘thoughtful caution’ while cutting costs, must retain talent and protect free cash flows to be able to invest when times change or whenever opportunities emerge for investment.

The three elements of a robust strategy to manage a tough business environment are: manage costs aggressively, listen to customers and invest in talent. The auto industry particularly should focus on free cash flows and keep “investment powder dry” to take big bets, he said.

Srinivasan also released the convention special issue of Business Mandate, the monthly journal of MMA.

Rajat Gupta, Director (Senior Partner), McKinsey & Company, presenting a research study by McKinsey Global, an internally funded think tank, said a national agenda is needed to generate over 115 million jobs over the next 10 years by allocating at least 0.5 per cent of the GDP, about ₹50,000 crore to employment generation, catalyse job-oriented investments, and increase spending on healthcare and education.

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