After Modi, Uday Kotak, Niti Aayog warn of tough times ahead

After Prime Minister Narendra Modi called for austerity measures due to the Iran war, industrialists, including finance industry veteran Uday Kotak on Tuesday (May 12) warned of “tough times” ahead.

Speaking at a Confederation of Indian Industry (CII) event in Delhi, finance industry veteran Kotak that the impact of the war was coming and it was “big”.

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“We haven't seen the impact of the war in two months, but now it's coming, and it's coming big. You are not far away from the shock unless the Iran war stops tomorrow morning. We need to get ready for tough times rather than waiting for the shock to hit us,” Kotak warned.

Self-reliant country

Against the backdrop of global economic uncertainty triggered by the West Asia conflict, Modi had appealed to people to avoid destination weddings abroad, limit foreign travel and opt for work-from-home, a pandemic-era practice, wherever possible.

He also said that India needs to reduce its dependence on foreign capital and focus on building a strong domestic pool of long-term risk capital to achieve true economic self-reliance.

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Kotak said a genuinely self-reliant country is the one that "does not need to depend on somebody else's money or power."

Referring to Prime Minister Narendra Modi's call to celebrate weddings in India rather than overseas, Kotak said the message had a deeper significance.

"A true, truly Aatmanirbhar, self-reliant country is the one which does not need to depend on somebody else's money or power," he said.

‘Don’t focus on short-term stock price’

Kotak, who is the founder of private sector lender Kotak Mahindra Bank, said the global environment is becoming increasingly fragmented, with countries prioritising their own strategic interests, making it imperative for India to strengthen its domestic economic foundations.

Calling it a "provocative" statement for a finance professional, Kotak said, "India has financialised too early." He said many companies have become excessively focused on quarterly earnings, stock prices and employee stock option gains, instead of building businesses with a three-to-five-year perspective.

"I would strongly urge companies to not be excessively focused on the short-term stock price... but think about building a company three to five years," he said.

Mittal says ‘these are difficult times’

At the same summit, Bharti Enterprises founder and chairman Sunil Bharti Mittal said that the crisis in the Middle East is creating tremendous pressure, and the industry should follow Modi's call by lowering energy cost and getting away with the obsession of gold imports.

Mittal said there is a need to invest more in the country and move faster towards renewable energy.

"These are difficult times. We, as a country, have been moving at a fantastic speed, growing at 6 per cent to 7 per cent year over year. Generally, things are looking very good. But there are situations that develop, which are beyond anybody's control. The current problem in the Middle East that we are all facing is creating a tremendous amount of pressure on the global economies, and India is no different in that aspect," he said.

NITI Aayog says ban construction work for 2 years

Meanwhile, government think tank NITI Aayog has advised the Centre to halt all major construction works across India for two years, including the demolition and reconstruction of the Nirman Bhavan, Udyog Bhavan and Shastri Bhavan ministerial complexes, a media report said on Tuesday.

The recommendation was made by NITI Aayog to the Union ministries concerned, pointing out that owing to cost escalation, rising imports and supply chain disruptions affecting the availability of raw material, all large-scale construction activity should be paused for two years, The Tribune reported, citing sources.