Several bright spots in India’s economic narrative: Birla

Speaking at the annual general meeting of Hindalco Industries Ltd on Tuesday, Birla added that the aluminium company has announced a total capital expenditure of about $8 billion over the next five years in its US business Novelis and in India.

“The economic recovery cycle in India remains strong thanks to the significant progress on vaccination and the upswing in public capex. Even during covid various government schemes helped small and medium enterprises and the worst affected sections of the population to weather through the crisis. Activity indicators are now well ahead of the pre-covid levels, and most estimates peg India’s likely economic growth in FY23 at 7%-plus,” said Birla.

While India’s inflation rate has been above the Reserve Bank of India’s tolerance range for some time, the overshoot has not been as severe as in many other countries, he said. Monetary and fiscal authorities have taken steps to dilute inflationary pressures, and a normal monsoon this year should help ease these pressures further, said Birla.

“Even with a rising trade deficit, India’s external indicators remain supported – with foreign exchange reserves equivalent to more than nine months of imports. With these silver linings, India appears to be well placed to ride through an uncertain global economic environment.”

“Thus, while businesses will need to remain on guard regarding financial market volatility and cost pressures this year, one expects the economy to show medium-to-long term growth recovery,” he added.

Talking about Hindalco’s capital expenditure plans, Birla said 70% of the company’s consolidated cash flows will be allocated to high-growth downstream segments such as electric vehicles, mobility, packaging, batteries and consumer durables.

“On the back of solid financial performance and a strong balance sheet, your company is well-positioned to drive a new wave of transformational growth fuelled by organic expansion. We have announced a total capital expenditure of about $8 billion over the next five years in Novelis and India.”

“Novelis has identified potential investment opportunities of $4.5 billion. In the India business, we have identified potential investment opportunities of nearly $3 billion,” he said.

Highlighting the positives for the Indian economy, Birla said dynamism in India’s digital ecosystem, diversification of global supply chains away from China and the greater emphasis of investors on sustainable finance offer new opportunities for India. “India has a robust pipeline of infrastructure projects. In addition, the government’s pragmatic policies, such as the production-linked incentive schemes, are helping. Many industries have seen fresh project investment announcements. Foreign direct investment flows have been strong. The burden of non-performing assets in the banking sector has eased. Startups and technology-based new-age enterprises have acquired critical mass. These sectors are exhibiting a strong momentum, providing new jobs, and enhancing customer experiences,” Birla said.

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