A growing economy combined with higher capacity utilisation will drive private sector investment cycle over the next few years, according to Anish Shah, President, FICCI and Group CEO of the Mahindra Group.

“The economy has been doing very well and is in a very good place at this point. Capacity utilisation has been growing across different sectors. So, as we start seeing higher capacity utilisation, combined with demand, private sector has to come in with greater investments. We’ve got balance sheets that are de-leveraged, and therefore the private sector is positioned well,” Shah told in an exclusive interview.

Risks of inflation

When asked if higher cost of funds would dampen the investments, Shah said: “The risks of runaway inflation are far greater than the risk of having a slightly higher interest rate. It is more important to ensure that inflation is under control, the economy is in good shape. And as that happens, rates will come down.”

Shah said the government should continue to focus on economic growth and ambitious targets around that. “The world is looking for an alternative to China. And India should be the place, which is not just an alternative, but in its own right be able to attract everyone in the world. So, if we have those ambitious targets, if we have the actions that are taken to attract capital, to be able to make in India for the world, it’s something that will be a huge plus for industry and for the population,” he said.

The FICCI chief explained that a growth of 17 per cent in government capital outlay for infrastructure sector is by any means a very strong growth number.

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It is very heartening to see the government put economics before politics: Anish Shah

“While it seems lower than 28 per cent growth last year, if you look at the share of capex, in government’s total expenditure, that will be 23.3 per cent this year, which is a 30-year high. Also, the capex to GDP ratio will increase to 3.4 per cent compared to less than 2 per cent in years before the pandemic. So capital expenditure from a government standpoint has increased dramatically. From an industry standpoint, it is very heartening to see the government put economics before politics,” he said.

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