Urban Consumption Not Growing As Anticipated

Confederation of Indian Industry (CII) President Rajiv Memani—in a conversation with Ruchika Chitravanshi in New Delhi—said that the financial risk-taking capacity of entrepreneurs has come down in the past 3-4 months. Memani spoke about issues ranging from the India-US free-trade agreement (FTA) to India's complex relationship with China and the labour code implementation. Edited excerpts:

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What are some red flags and green shoots in the whole macroeconomic outlook right now?

All the macroeconomic parameters, from a government standpoint, are strong. Net non-performing asset (NPA) and interest rates are at an all-time low. Inflation is pretty low. Overall, the macroeconomic system, the financial system and capital markets are pretty robust. On red flags: the speed that one desires urban consumption to grow is not going at the level at which companies anticipated.

Outside that, things are more out of India's control: They are around geopolitics, geo-economics, the entire global trade situation and how it impacts India.

If you're a trusted partner today, and have political stability, which India has, and a clear policy direction, then you would be a beneficiary of what's happening in the world. Relatively speaking, India is in a good position.

Monitoring Indian Economy (CMIE) shows a dip in private sector project announcements in Q1. Why are we not seeing a pick up in private capex?

In the last three years, private capex has moved up very well. It has been the normal perception that private capex is not happening. Private capex is happening and happening in a significant way. During the last four-five months, capex has toned down a little bit, largely because of global trade and geopolitics. People just want things to settle down.