In an interaction with Nayantara Rai of ET NOW at India Development Debate, Ajay Piramal, Chairman of Piramal Group, talks about his interaction with the Prime Minister on how to revive the economy and why reviving demand would be key to bringing growth back on track. Edited excerpts:

Nayantara Rai: Did the Prime Minister spoil your holiday plans or would you say this was a good start to the New Year?

Ajay Piramal: It was a very good start to the New Year. At a time when the economy is facing some challenges, it is good that the Prime Minister himself is looking into it. As you said, he did not have any other officials with him there. His main purpose was to understand what are the pain points in the economy and what are our suggestions to bring the economy back on track. It was an open and frank discussion and he was encouraging.

Nayantara Rai: Can you share with us the other names in the group that you went with? We understand that the meetings with the Prime Minister minister have been in groups, some of them sectoral.

Ajay Piramal: The Prime Minister wanted to speak about the overall economy. He was open to listening to comments about any other sector as far as the economy was concerned. We discussed many subjects. Out of which some of the points discussed were — how credit flow could increase towards business and industry, how NBFCs needed more credit, how real estate needs to be revived. We also talked about the pharmaceutical industry, medical diagnostics industry and hospitals as well. He was open to discuss any other issues that we had.

Nayantara Rai: I would like to tell you that I did reach out to two other members and they told us how the Prime Minister actually opened the meeting by saying be honest in your feedback while giving suggestions on how to revive the economy, bring demand back and basically to not hold back and that he’ll be in listening mode. Was it similar to your meeting?

Ajay Piramal: Yes, it was absolutely similar. In fact, he also said that if there is any criticism or failings, let us know because the desire is only to improve. This was in addition to everything else you said.

Nayantara Rai: You represent some very important sectors with many of them being high employment generators. Can you share some of the suggestions that you made?

Ajay Piramal: We talked about how credit could be increased in the economy, specifically in the NBFC and real estate sector. As far as credit flow to the NBFC sector was concerned, the Prime Minister said NBFCs with good asset quality, as we have in Piramal Enterprises, would get adequate credit.

We also spoke about how the real estate industry needs to be revived because real estate contributes to 7% to 8% to the GDP of the economy and 17% of employment and how some 50-300 industries are affected by real estate. In addition, the Prime Minister was keen to know how medical diagnostics could be supported in this country because a large import is taking place of such equipment. Now with Ayushman Bharat and all the spending in healthcare going up, he was keen to see how the Indian industry could support in making medical and diagnostics equipment.

Nayantara Rai: I happen to know from sources that the Prime Minister has asked to come back with suggestions on reviving demand as one of the diagnoses now seems to be that the pain point in the economy is not on the supply side but more on the demand side and therefore we have to get consumption back. Did you get such a feeling?

Ajay Piramal: We said that there is a question of supplies on one side, but it is more important to see that demand is back. So yes, that is a correct interpretation.

Nayantara Rai: Has he called you back? I believe a couple of industrialists have been called back and they have to get back with more data and more ideas.

Ajay Piramal: The Prime Minister is always open to ideas and he said he is willing to meet again across any industry. It is not only confined to financial services or pharma. He is open to listening to any industry if they have any ideas with them. He seems determined to see how industry and economy can be revived.

Nayantara Rai: You did say that the prime minister was not only in listening mode but he also said to be honest as far as criticism goes. Was your group honest and did you give any criticism?

Ajay Piramal: I have always been honest whenever such conversations have taken place and I was honest there too. So yes, the criticism, as well as the positives, were shared.

Nayantara Rai: We saw a big corporate tax rate cut. The belief, when that was announced, was that corporates will respond to it by increasing investments. But private-sector capex cycles still remain stubborn. Why do you think that is the case? Is it the consumption side that needs to be addressed to bring money back directly to consumers so that the private sector has a reason to invest?

Ajay Piramal: Absolutely. The corporate tax cut does help in seeing that there is more cash available to the corporates but you can only invest when there is demand. What is important is to see how demand can be increased and then obviously the capacity build-up would follow.

Nayantara Rai: But the other reason we have seen for the private sector for not investing, and this has been spoken about by the FM in her rath yatras, was the fear of the investigative agencies and the taxman. Do you think until that is addressed we really will not see an increase in the capex cycle?

Ajay Piramal: The most important thing is for the demand to come back. If there is demand then the industry will invest because you do not want the demand to go unsatisfied or competition or imports to take over. Once the consumption cycle revives and demand revives, capex will follow.

Nayantara Rai: The private sector has not been up to the mark when it comes to corporate governance standards. This is something that we have seen since this entire slowdown started because of the IL&FS mess and the pathetic state of affairs when it comes to corporate governance. Mr Uday Kotak often says do not confuse corporate governance with liquidity. But having said that, all of you also have to deal with a lot of extraneous circumstances. For example, at IndiGo, you have two promoters fighting and AGMs being called. You are a board member at Tata Sons and look at the NCLAT verdict. There is a shadow of doubt over the management. How are you grappling with all of this?

Ajay Piramal: A lot of changes have taken place in the environment for doing business in India. All of these measures are towards improving corporate governance practices. Sometimes, one may feel that the changes which are being suggested are too rapid and there could have been put in place more gradually but this is the way the world will be. What is happening in IndiGo, is an individual example. The Tata matter is before the Supreme Court and so, we should we let the courts decide what will be the ultimate direction for the Tatas.

Nayantara Rai: Would you see the Prime Minister intervention as the biggest confidence booster that the economy could have received?

Ajay Piramal: It is a positive sign that the Prime Minister is taking a personal interest in the economy. What he says and how it is put into action by the government is what we would now wait to see.


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