A day after a meeting of the industry captains with Prime Minister Narendra Modi, Sanjiv Mehta, Chairman and Managing Director, Hindustan Unilever, who recently took over as the President of FICCI, was full of optimism about the economy. In a freewheeling interview with BusinessLine , Mehta talked about the post-pandemic recovery, balancing the requirements of fast-growing tech-businesses and MSMEs. Stressing that the culture of innovation and scaling up the R&D pace is the future, Mehta underlined collaboration between Indian academia and the private sector. Excerpts:

You’ve talked about optimism, but there are simultaneous concerns about slow demand, especially in the rural areas. How do you perceive the future patterns of

consumption and demand?

Demand had become muted by 2019 before the pandemic outbreak. Rural demand, however, remained resilient due to government interventions such as free food grain scheme, DBT and the MNREGA outlay during the pandemic when urban mobility and demand had gone down dramatically. The government interventions should definitely continue for some time.

But things are looking up. Tax collections have gone up by about 30 per cent in the first seven months, compared to the same period in 2019. That gives us a huge amount of firepower to invest in different areas.

In terms of merchandise exports, at the beginning of the year, $400 billion looked like a tall order, but now we are within striking distance of reaching that milestone. While private capital spending has not yet happened, the FDI inflows have been good largely owing to the tech space. From the agri production perspective, sowing and harvest have been decent. These are clearly some very good indicators and with expectations of 9 per cent-plus GDP growth rate this year, we will be regaining most of what we lost in the last year of negative growth.

What are your

plans for FICCI?

FICCI is an amazing institution with great legacy that dates back to nine decades. With a strong talent that FICCI has, my job will be to strengthen the institution and inculcate the best practices to leverage on this talent. I would personally like to get involved in areas such as climate and sustainability, industrial revolution 4.0, strengthening the MSME sector, women’s empowerment, and going deeper into R&D and innovation.

How do you analyse the disparity and inequity in our growth patterns – start-ups, unicorns have multiplied while

the MSMEs

are under stress?

It is not an either/or situation. We need to accelerate exports, innovation and R&D as well as strengthen the entire MSME ecosystem through better access to capital and technology. We need to look at sectors where as a country we can compete on cost, quality service and innovation. The PLI scheme, for instance, gives you scale and, in turn, this allows you to reduce costs. Either you have a natural advantage or you create competitive advantage.

What I shared with the Prime Minister at the meeting yesterday was that we have to go up the ladder when it comes to R&D and innovation. So, we need to find some areas where we can be best in class. It could be biotech, green tech or digital tech. These are the areas which are very ripe for innovation, where the government, academia, the private sector and start-ups can come together.

So, we could create innovation cities or manufacturing clusters, which go beyond co-location to collaboration. We could look at at setting up Centers of Excellence that could be jointly run by academia and private sector or catalytic companies co-owned by public sector R& D and the private sector..The focus of Indian universities should be moving from just basic research to ensuring that you land products into the market.

We cannot borrow technology from outsides, and also we need to bring in a culture of innovation. I am not a big supporter of jugaad because in many way it stifles big innovations and creativity as one can end up just looking at short term fixes. For instance: We, at HUL, have collaborated with the Office of the Principal Scientific Advisor under the initiative ‘Vision’, where scientists are working together to look into addressing questions around vaccine efficacy, vaccine longevity or co-relation between vaccine efficacy and other factors such as nutrition.

What is your

Budget wishlist?

At this stage what we need is steps to protect the poor and the marginal on one hand and get the economy into virtuous cycle at the same time. How the government would be spending is critical and, hopefully, in terms of fiscal deficit, it will be a glide path reduction and not sharp reduction.

Last year was a great Budget in very challenging circumstances. But this year with better tax collections and the economy doing much better, the government needs to build on that. No radical surprises, but stability is required so that investors who are putting money, they know the playing field.

How do you see Inflationary pressures impacting consumption ?

While a little bit of inflation is good for the country, but when inflationary pressure increases beyond a point, it harms the poor. We have to be cognizant of this and from a monetary policy perspective, we would have to do a fine balancing act of not stifling growth, but also not letting inflation spiral either. A large component of our GDP is private consumption and so private consumption has to grow. We need more money in the hands of more people.

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