Uncertainty still exists about coronavirus mutations

The Indian economy is rapidly normalising towards pre-pandemic activity levels, even as uncertainty exists about coronavirus mutations and repeated infection waves, industrialist Kumar Mangalam Birla said on Wednesday.

Vaccination is picking up pace, which would improve India's resilience against a potential third wave, the chairman of Aditya Birla Group said, while virtually addressing shareholders at the AGM of group firm UltraTech Cement Ltd. Moreover, various steps taken by the RBI and the government have helped in containing the economic disruptions of the pandemic, Birla added. "Economic indicators show that the Indian economy is also rapidly normalising towards pre-pandemic activity levels. In FY22, the Indian economy is projected to grow at a little below 10 per cent," he said.

He added the fiscal stance clearly seems poised for an acceleration of government capital expenditure (capex) in the coming years, especially in relation to the National Infrastructure Pipeline projects. Alongside, there are very strong signals of a pick-up in the private sector capex cycle, driven by companies like UltraTech, he said.

"The three factors of cyclical upswing, conducive policy impulses and an improving global backdrop are likely to align themselves to position India for a virtuous cycle of growth and investments in the medium-term," he said, adding, "in the interim, of course, the policymakers and companies will need to remain on guard with respect to the pandemic-related uncertainties." Post the onset of the pandemic, policy support -- in terms of fiscal stimulus and ultra-easy monetary policies -- has been stupendous at the global level.

"While some countries may be pondering over a gradual normalisation of monetary policies, such actions will happen at a measured and calibrated pace," he said, adding infrastructure spending is likely to be stepped up significantly in the US, and green investments are getting a fillip in most economies. Moreover, companies and businesses have demonstrated remarkable resilience throughout the pandemic -- taking up productivity and digitisation measures with missionary zeal.

"Businesses have devised ways of working that adapt to pandemic-related conditions and uncertainties," he noted.

The International Monetary Fund (IMF) expects the world economy to grow at 6 per cent in 2021, although on a contracted base, he said. "More remarkably, world growth is projected at an above-trend 4.9 per cent in CY2022. US and China, which together account for one-third of the world economy, are powering the global economic recovery," Birla added. The Aditya Birla Group, which operates in sectors such as metals, pulp and fibre, chemicals, textiles, carbon black, telecom and cement, gets over 50 per cent of revenues from its overseas operations spanning 36 countries. Talking about UltraTech, Birla said it has announced growth plans of 19.8 million metric tonnes (MT) with an investment of over Rs 6,500 crore. "The additional capacity will be created in the fast-growing markets of the east, central, and northern regions of the country," he said. Commercial production from these capacities is expected to go on stream in a phased manner during FY22 and FY23. Upon completion of the latest round of expansion, UltraTech's capacity will grow to 136.25 MTPA, reinforcing its position as the third-largest cement company in the world, outside of China.