Profile: Keki Mistry is vice chairman and CEO of HDFC; he’s been associated with it since 1981. Instrumental in setting up HDFC group companies, including HDFC Bank. A chartered accountant, he has consulted for Mauritius Housing Company, Asian Development Bank and Commonwealth Development Corporation in Thailand, Mauritius and the Caribbean Islands.
As India marks its 67th Independence Day, there is growing trepidation as to what the future holds for the country. Any assessment of the current economic scenario is swathed in pessimism. The heady days of aspiring for double-digit GDP growth rates have long since been put to rest as we appear to have squandered the opportunity. Nonetheless, not everything in India needs to be painted with the brush of doom. There are a number of sectors that have performed well despite varying economic cycles. Sectors like FMCG, IT/BPO, pharmaceuticals and retail finance have remained resilient despite the economic downturn.
Rising rural incomes have been a shot in the arm for FMCG companies. The $100 billion IT/BPO industry has created over 12 million jobs, as India became the back office to the world. Another striking example of a well-performing sector is retail finance. Given the huge demand, home and personal loans, credit cards, two-wheeler and car loans have grown exponentially over the past decade. Retail credit penetration at 10 percent of GDP is extremely low, so the potential to grow is immense.
Perhaps the most radical, structural change in India’s economy in the recent period has been the rise of its middle class. McKinsey estimates that the size of India’s middle class will cross 600 million by 2025, making the country the world’s fifth largest consumer market. What characterises this middle class is its high aspirations, a ‘wanting more’ consumer mindset and its confidence and optimism about its future. Driven by India’s vast domestic consumption, several multinationals have recognised the importance of having a slice of the Indian market.
The irony is that in India, consumer confidence has sustained, while business confidence has taken a beating—particularly with regard to companies in the industrial and infrastructure sectors.
The relationship between government and business appears to have fallen to an unprecedented low. It has been reported in the media that some leading industry houses have said that they find it easier to make investments overseas rather than wait endlessly for approvals. Nothing is more unnerving for business sentiment than uncertainty in the regulatory environment. In the infrastructure sector—be it telecom, power, or roads—lack of clarity on policies has eroded investor confidence.
(This story appears in the 23 August, 2013 issue of Forbes India. To visit our Archives, click here.)