India, as a democracy, follows a different growth path than the one China takes

The Inditrade Group has rapidly expanded and evolved over the past seven years. Its domain extended from agri-commodity and micro-finance in the initial years, to MSME finance and insurance distribution initiated before the pandemic. Since then, it has ventured into phygital distribution of fintech products and services to the financially underserved, rural distribution of consumer goods and digital personal loans. Speaking to Bizz Buzz exclusively, the visionary behind Inditrade, Sudip Bandyopadhyay, Group Chairman of Inditrade Capital and Investor - Emotix, Dining Plus and other Fin tech startups, talks about the evolution of the group and shares his views on global issues and the changing dynamics within the Indian economy

Your group's philosophy has recently changed from 'financing progress' to 'let's progress". Tell us about the motivation behind the transition and what it entails.

All our verticals have been growing phenomenally since their respective inceptions and in 2021, we felt the need to pause and reflect on our mission and purpose; in a sense, we sought to contemplate on and discover our Kigali, i.e., our 'reason for being'.

When we consulted all our senior management that spearhead different verticals, it became clear that Inditrade is a people-centric group whose focus is on Bharat. Our core values comprised empathy, accessibility, transparency and convenience and the vertical heads, in unison, endeavoured to enable progress and create a social impact through our services.

'Financing progress' was a good purpose, while we were predominantly focused on lending. However, with the expansion into newer verticals, the progress we could facilitate expanded too. Essentially, we sought to initiate a larger movement, which enveloped all stakeholders within and outside of the company. This all-encompassing movement to achieve progress will be driven by synergies that emerge from working together, within the company, with stakeholders beyond the company and even supporting progress on a broader canvas. Accordingly, 'let's progress' defined a movement and statement of purpose that could be adopted by any proponent of 'progress for all'.

Geo-political tensions between Ukraine and Russia, the world's 'bread baskets', have resulted in significant disruptions in global agri-commodity supply chains. Agri-commodity finance is one of the oldest verticals of Inditrade; as a keen observer of these developments, do you believe that the time is ripe for India to claim a larger segment of the global agri-commodity supply chain?

Ukraine and Russia produce more than 30 per cent of the world's wheat and barley, 20 per cent of the global maize and over 50 per cent of its sunflower oil. With these two agri-sector giants shifting their focus to conflict from cultivation, alongside the trade sanctions, agri commodity supply chains have broken down.

So, yes, this presents a sterling opportunity. India produces some of the world's best rice, grains, tea and spices, thanks to its 46 soil varieties. In 2019-20, total food grain production was estimated at 292 million tonne, while as per estimates, 225-230 MT is needed to feed its population in a year. In 2021-22, food grains production touched a new record with both Kharif and Rabi output crossing the final estimates for 2020-21 as well as the targets set for 2021-22.

However, to leverage this opportunity, the entire value chain in the agriculture sector, from pre-harvest to sale, will have to be made more efficient. Various non-conventional elements, like finance, insurance and technology, will have to play a more significant role, alongside more conventional factors like farming techniques, farm equipment, storage and logistics, etc.

Currently, it appears that India is at a relative advantage to most major countries, even in the developed world. Is India ready to step up its economic game and challenge China and become the emerging super-power of the east?

It's true that domestic growth is recovering strongly and India once again stands as the fastest growing nation. Other good news is that inflation eased for the third straight month in July 2022 and many high frequency indicators remain buoyant. The bad news is that in a globalized world, inflation and recession are often imported. So, which way India could swing from here is still not certain.

With respect to replacing China, historically, India has never demonstrated the ability to leap ahead rapidly. We follow a different growth path from the one China takes, in a large part due to the fact that we are a democracy and our economic policies are very different too. Our growth has proved to be more real and sustainable, in the sense that there are less bubbles along the way. Of course in the current environment where economic growth trends between countries are all linked, one can never say.

So, is the world moving towards a recession?

Most institutional economic observers seem to think that major economies of the world are heading for negative growth for at least two quarters each, which is literally the common definition of a recession. However, the heartening news is that despite all the bad news with respect to inflation, rising interest rates and monetary tightening, corporate profits are high and unemployment is low, especially in the US; being the largest economy of the world by far, any good news in the US should be of comfort. While these metrics could get impacted with a lag, there's a sliver of hope that supply chains get formed rapidly and central banks around the world can work their magic to correct inflation before the real economy gets badly impacted.

In your opinion, is it a boon or a bane that we live in a global village?

Typically, the reference to 'global village' is positive. It suggests living without restrictive boundaries and beneficial sharing across borders. But there are times, as in the case of the recent pandemic, when living in an interconnected world comes at a cost. While the spread of Covid19 wreaked havoc across the world, on the bright side, it was heartening to witness levels of cooperation between nations in search of cures and the support that was extended across borders. Nevertheless, the entire global village is adversely impacted at such times.

At another level, contagion of economic and financial adversity is another price that must be paid for living in a global village. Take for instance the current global concerns about food inflation, triggered by the conflict between Russia and Ukraine and a breakdown in global supply chains. Despite, India's food-grain production touching record highs, the prices of commodities in India are rising rapidly, in sympathy for global price rises.

This is true for financial markets too. There's a popular quip, "When the Fed sneezes, the world catches a cold", which reflects the reality of the world's dependence on monetary policies in the US, since the dollar is the reserve currency of the world.

Clearly, there is a need for guard-rails that keep interdependence from becoming too all-pervading. The philosophy of Aatma Nirbhar Bharat and its emphasis on economic resilience may be a prototype for economic guard-rails.

The Inditrade Group, being predominantly a financier, is inextricably connected to monetary dynamics in the economy. How do you see the monetary scenario panning out in the near term?

To a large extent, it depends on the geo-political situation globally. If the conflict gets resolved before the real economy, i.e. large and small businesses, face adversities in their fund flows, the financial markets could recover within a quarter or two, at most. However, if international supply constraints persist and fund flows remain volatile, it could lead to a longer term tightening in India's financial conditions, reflected in further rising of interest rates, bank lending rates, weak capital flows and a depreciating rupee.

As the RBI governor explained, several storms have hit together and India's monetary policy response should be seen as an important step to steady the ship. On the bright side, the Indian economy has been fortunate to have sterling RBI governors who have, in the past, brought this ship to safety in the midst of raging storms. While there is never a perfect playbook for any financial or geopolitical incident, it's comforting to know that the RBI is as vigilant as always; it actually raised domestic interest rates a few hours before the mighty US Fed called in its second rate hike. It's safe to say that it will follow a conservative but not necessarily reactionary approach to protect domestic financial markets from international backlash in FY23.