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India is amongst the few countries that has more tailwinds than headwinds and is thus in a “bright spot” to grow, given that appropriate emphasis is given to corporate governance, said HDFC Chairman Deepak Parekh.
“India will increasingly be a force to reckon with and the only thing that could hold it back is not enough emphasis on governance,” Parekh said at a governance event organised by Excellence Enablers on Thursday.
Saying that sustainable, long-term growth and governance are strongly correlated, Parekh added that he is confident that India will “deliver like never before” led by the evident fundamental changes in the Indian economy.
“Much of these changes seen on the ground are because of significant institutional and legislative-based governance reforms. GST, e-way bills, direct benefit transfers, e-bidding, digital payments, RERA, IBC and faceless tax assessments, amongst several others,” he said.
He added that the journey towards strong governance continues to be a “work-in-progress”, with the need for stronger governance reforms at the state level, continued focus on improving ease of doing business, a stable regulatory and tax regime to give confidence to long-term investors, and unclogging India’s courts.
Given that growth with governance is non-negotiable, the ultimate objective is that corporate governance systems must become simpler with more reliance on trust and ethics, rather than compliance, Parekh said.
In order to achieve this, he advised companies to guard against leverage, negotiate for profit maximisation, be open, transparent and well-capitalised, stay liquid, and not to over-promise.
With respect to ESG frameworks, Parekh said India has held its ground well on the climate debate so far, with encouraging transformational progress across renewables, green hydrogen, electric vehicles, and production incentive schemes for components such as solar panels and fuel cells.
“The recent announcement of the sovereign green bond framework is another significant step for India. Green governance will be critical for India, especially if the country wants to attract long-term capital,” he said.
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