As the growth of the Indian economy is projected to slow down to five per cent, industry experts are stressing the need to invest in the future rather than focus on cost-cutting initiatives.
Speaking during the India Finance Forum’s ‘Addressing Growth in Uncertain Economic Environment’, organised by the Confederation of Indian Industry here on Friday, S Mahalingam, former chief financial officer of Tata Consultancy Services, said businesses had to create a more efficient economy that adhered to the requirement of the future.
He said that there was a need for businesses to adapt to technology. In 2006 there were no social networking sites but now you have cloud computing, Twitter, Facebook. Technology is changing and this is the biggest challenge for businesses, Mahalingam said. He said that in the future regulatory pressures would continue to increase.
M Narendra, chairman and managing director of Indian Overseas Bank, urged businesses to focus on the rural market. He stressed the need for new entrepreneurs in the manufacturing sector.
He said that banks were willing to help private sector growth but there needed to be fiscal discipline and a minimisation of risk.
Experts were optimistic about a better growth perspective with oil prices coming down and the Delhi-Mumbai freight corridor taking shape.
S Chandramohan, president and group chief financial officer TAFE LTD, said growth was linked to the monsoon. He said a normal monsoon had been predicted for this year. He expected the economy to attain eight per cent growth by 2014-15 provided everything went well in the global economy.
With the corporate sector feeling the pinch, even the tax revenue of the government was hit during the global economic slowdown. It is believed the nation suffered a nearly 2.5 per cent loss of tax revenue in the gross domestic product. When the GDP grew at eight per cent, the tax to GDP ratio grew by 25 per cent. The collection reflected a huge saving in the corporate sector and as a result many decisions were taken including the slashing of customs rate.