As slowdown fears turn real, Baba Kalyani, chairman, Bharat Forge, says it's critical to have a political consensus on reforms. Industry, too, should gear up to reduce costs and seek new customers, in new markets.
The GDP numbers, specially manufacturing data, clearly highlight that slowdown is here for real. What is leading to this?
A combination of factors. The slowdown in the global economy, particularly the US and Europe, has impacted our exports. The crisis in global financial markets has disrupted capital flows into our economy, which has taken a toll on exchange rates, liquidity and trade credit. High inflation and a high fiscal deficit have affected business sentiment. All this is reflected in the corporate sector's performance.
What is your specific suggestion to the government?
The country needs a strong political consensus on economic reforms. We need more reforms in critical areas. The government and the Reserve Bank of India also need to monitor and ensure liquidity in financial markets to neutralise large foreign exchange outflows on account of repayment of foreign loans and FII (foreign institutional investor) withdrawals.
Do you think Indian industry will need a fiscal package like the one in 2008-09?
It is perhaps too early to reach this conclusion. However, we need to believe
For the time being, companies should emphasise on reducing costs, improving operational efficiency, enhancing revenues and margins, resort to strategic sourcing to address the issue of volatile input prices, explore opportunities with new customers and in new markets, and take steps to improve market share, profit and performance.
To what extent is overall policy paralysis affecting industry?
Decision making by government is clearly not happening at the pace it should. There are several reasons for this and most of these are well known. It has become imperative for the government and major political parties in the opposition to reach out to one another and reverse this situation.
How is the slowdown affecting you? What is Bharat Forge doing to maximise cost efficiency?
Are we heading back to the 2008-09 period? We don't think we are heading back to the 2008-09 situation, simply because we learnt a lot from that experience. We have already initiated measures to improve cost and operational efficiencies, renewed focus on customers and markets, and are engaged in leveraging resources from various world geographies to enhance competitiveness.
Image: Baba Kalyani
