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6 | BW BUSINESSWORLD | 27 January 2024 UNION FINANCE MINISTER Nirmala Sitharaman has indicated that the interim budget that she will present on 1 February will be shorn of “spectacular announcements”, as indeed the vote-on-account on the eve of a national general election inevitably is. Even so, the hopeful hope that Sitharaman’s last budget presentation in her current term, will bear good tidings for select demographics like women, the farming community, industry and the tax payer. Our package on the Union Budget compiles voices from industry, think tanks and our own inhouse experts in a bid to predict the contents of the finance minister’s red tablet pouch. Ashish Sinha picks up trends from past interim budgets and maps a pattern that indicates that the upcoming interim budget too may play a pivotal role in shaping India’s future economic roadmap. The year 2023 saw a prolonged funding winter for startups, primarily because of macroeconomic trends. Despite the thin capital flows, the startup ecosystem echoed the mood of the Indian economy at large. It showed resilience. Bravehearts among new entrepreneurs focussed on a more frugal business approach and pressed the pedal on scouting for profitable customers. A significant driving force behind this entrepreneurial drive is the relentless acceleration of digitalisation and developments around artificial intelligence. This phenomenon has paved the way for a wave of tech-focused startups, who are disrupting traditional industries and creating new opportunities for entrepreneurs and consumers. From fintech solutions to edtech platforms, these digital ventures are transforming how we live, work and interact with the world around us. The seventh edition of the annual BW Disrupt 40 under 40 awards were organised in this backdrop. With over 150 entries and a thorough screening round, nearly 80 nominees were finally shortlisted and invited to make a presentation before a jury panel chaired by Aman Gupta, Co-founder & CMO, Boat Lifestyle. Startups were judged by their major accomplishments, key contributions to their organisations, strategies for brand growth and leadership journey in the year gone by. Our cover package features the winners of this year’s event. Read about their entrepreneurial journeys and how they forecast the growth metrics of India’s startup ecosystem. You will also enjoy reading this issue’s Last Word, from my conversation with Tata Play Managing Director and CEO Harit Nagpal. Nagpal talks of his new book Adapt: To Thrive, Not Just Survive, which incidentally is among my top picks for you to read this year, as listed in the previous issue. Mr Nagpal delves into how business basics stay the same and how businesses should adapt to the changing environment and make the most of the disruption in their respective sectors. Of course, we also bring to you all our regular features and columns. Happy Reading! ANNURAG BATRA [email protected] BUDGETS AND BRAVEHEARTS EDITOR-IN-CHIEF’S NOTE
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10 | B W BUSINESSWORLD | 27 January 2024 MAILBOX YOUR COMMENTS TALK BACK www.businessworld.in RNI NO. 39847/81 I 13 JANUARY 2024 YEAR AHEAD SPECIAL Rs 200 MODERATING INFLATION, PROSPECTS OF LIMITED MONETARY POLICY EASING AND POST-ELECTION REFORMS ARE EXPECTED TO ACCELERATE THE INDIAN ECONOMY IN THE NEW YEAR WHAT TO EXPECT IN 2024 CLIMATE OVER POLITICAL AGENDA This refers to the editorial (“ COP and Coping,” BW, January 13) . The recent COP 28 in Dubai witnessed global leaders discussing climate change, amidst growing concerns over extreme weather events and rising global temperatures. Despite previous COP agreements and the urgency to limit temperature rise, international consensus and action remain elusive. Amidst the urgency for global cooperation, the disconnect between global intentions and local actions is evident, with ongoing environmental degradation and policy decisions contradicting sustainability efforts. The urgent need for a global-local environmental approach becomes increasingly clear, as the detrimental impact of human activities on the environment continues unabated, overshadowing scientific advice and efforts for positive change. The urgency to address climate change far outweighs political agendas and short-sighted pursuits. PIYUSH RAUT, EMAIL ECONOMIC PROPULSION This refers to the editorial (“ Firing On All Cylinders,” BW, January 13). India’s economy has displayed remarkable resilience and potential for growth in the face of global challenges. The country’s impressive export figures and robust direct tax collections highlight its stability and steady progress. With a projected 7 per cent growth rate, as per the central bank’s latest forecast and encouraging high-frequency indicators like strong PMI levels and booming automobile sales, India’s economic outlook is undeniably optimistic. The surge in foreign direct investment and the success of the Production Linked Incentive schemes further underscore India’s attractiveness for investors. The ongoing initiatives like the Open Network for Digital Commerce and the performance of core industries point towards a promising outlook for the Indian economy in the coming years. SHWETA MALIK, EMAIL BLIPP THIS PAGE TO GIVE US YOUR FEEDBACK INSTANTLY Submissions to BW |Businessworld should include the writer’s name and address and be sent by email to the editor at [email protected] or by mail to 74-75, Scindia House, Connaught Place, New Delhi-110001
12 | BW BUSINESSWORLD | 27 January 2024 India’s Most Promising Startups CONTENTS Cover design by DINESH S. BANDUNI The Disruptors India’s most imaginative entrepreneurs under 40 years of age, who are disrupting the business landscape with their innovative startups 48 14 Jottings The fiscal deficit & some anomalies; Battle of beaches; Investment buzz; Not Apple’s year? and much more 18Columns Minhaz Merchant (p. 18); Vikas Singh (p. 20); Srinath Sridharan & Shailesh Haribhakti (p. 22); Amit Kapoor & Amitabh Kant (p. 24); Krishan Kalra (p. 26); Srinath Sridharan & Steve Correa (p. 28); Prakash Iyer (p. 30) 32 Rice King The story behind LT Foods’ continued dominance in the domestic market, its leadership in specialty rice and the competitive Basmati segment, and expanding presence in more than 60 overseas markets THE BUDGET BUZZ 40 Srinath Sridharan, Columnist 42 Aditi Nayar, Chief Economist, Head - Research & Outreach, ICRA 44 Dipti Deshpande, Principal Economist & Bhavi Shah, Economic Analyst, CRISIL 46 S.P. Sharma, Chief Economist, PHD Chamber of Commerce and Industry VOLUME 43, ISSUE 07 27 JANUARY 2024 Photograph by Colorful Geometric Illustrative Hiring Talent Social Media Post
27 January 2024 | B W BUSINESSWORLD | 13 The pages in BW Businessworld that are labelled BWi or Promotions contain sponsored content. They are entirely generated by an advertiser or the marketing department of BW Businessworld. Also, the inserts being distributed along with some copies of the magazine are advertorials /advertisements. These pages should not be confused with BW Businessworld’s editorial content. TOTAL NO. OF PAGES INCLUDING COVER 110 40 UNDER 40 WINNERS 50 Abhishek Deshpande, Recykal 51 Abhishek Dua, Showroom B2B 52 Akash Agrawal, ZOFF Foods 53 Akshay Verma, FITPASS 54 Anant Tanted, The Indian Garage Company 55 Arjun P Gupta, Smart Joules 56 Arush Chopra, Just Herbs 57 Ashish Sharma, ZIEL Financial Technologies 58 Atul Monga, Basic Enterprises 59 Bharat Bhut, Goldi Solar 60 Bhavik Vasa, GetVantage 61 Chirag Gupta, 4700BC 62 Devesh Bansal, Skipper 63 Dinesh Kumar Kotha, Confirm Ticket Online Solution 64 Gaurav Tripathi, Innoplexus 65 Gurmeet Singh Arora, Flax - Healthy Living 66 Harsh Binani, Smartworks Coworking Spaces 67 Himanshu Adlakha, Winston Electronics 68 Kanika Dewan, Shikhar Dhawan Foundation & Good Deed Relief Foundation 69 Kaushik Srinivasan, eMudhra 76 Mihir Gadani, OZiva 77 Nalin Saluja, Virohan 78 Nilesh Vishnu Ghule, LoadNow - Forza Logistics Techlabs 79 Nipun Marya, iQOO India 80 Nitin Viijay, Motion Education 81 Pawan Gupta, Betterhalf 82 Sangram Simha Datla, Incnut Lifestyle Retail 83 Sathvik Vishwanath, Unocoin 84 Shashank Sharma, Sunsure Energy 85 Sourabh Bansal, Magicrete Building Solutions 86 Subramanian Viswanathan, Disprz 87 Sukriti Sharrma, Plüsch 88 Udita Bansal, Truebrowns Lifestyle 89 Vinit Garg, Mylo 90 Vishal Pandya, REConnect Energy 98 Online Love A click through some of the popular dating apps to understand the trends in the world of online love and whether adequate security measures are being taken to ensure safety of users 70 Krishna Dushyant Rana, Platinum Industries 71 Kunj Yadav, Yadu Corporation 72 Laurent Samandari, L’Opéra 73 Malini Adapureddy, The Deconstruct 74 Mayank Goyal, moneyHOP 75 Mayank Gupta, Zopper 36 WHAT WILL FM DO? As the government gears up to present an Interim Budget later this year, a peek into what the industry and the salaried class are expecting 107 Last Word Harit Nagpal, MD & CEO, Tata Play on his latest book, Adapt: To Thrive, Not Just Survive, and the future of the OTT industry Photograph by Naval Kishor Photograph courtesy: PIB
JOTTINGS The fiscal deficit target and some anomalies AS ANOTHER FISCAL draws to a close, revenue receipts are expected to surpass the FY2024 Budget estimates. Even so, economists wonder whether the medium-term fiscal deficit goal of 4.5 per cent of the gross domestic product (GDP) will be achieved by FY2026. Union Finance Minister Nirmala Sitharaman may cap expenditure around Rs 45 lakh crore, in which case, contingent on a normal monsoon and sustained domestic demand, experts anticipate FY2025 GDP growth to hover around 6.2-6.3 per cent, slightly lower than the current financial year’s expected growth of 6.5 per cent. Caution is advised as economists closely scrutinise the central government’s capital expenditure and fiscal consolidation measures effective February 1, the day Sitharaman is expected to present an interim-budget or a vote-on-account, as is the norm in a year of general elections. Credit rating agencies like ICRA project a fiscal deficit target of 5.3 per cent of GDP for FY2025, midway between the expected FY2024 print of six per cent and the mediumterm sub-4.5 per cent targetted by FY2026. Anticipating a substantial drop in the revenue deficit, ICRA suggests that a FY2025 capex target of Rs 10.2 trillion could pose a challenge to achieving fiscal consolidation in FY2025 and the medium-term target by FY2026. —Ashish Sinha Battle of Beaches IT TOOK SOCIAL MEDIA posts of three Maldivian officials mocking Prime Minister Narendra Modi, for Indians to discover their own home-grown tourist spot, Lakshadweep. Amidst an escalating diplomatic row, furious Indians have declared a ‘Boycott Trend’ on X (formerly Twitter) and are cancelling trips to the Maldives. Indian tourists were the largest flock at Maldives’ exotic beach locations till December. Will the anti-Modi rant change that now? With beach destinations both popular and lesser-known, the Indian coastline is one of the longest in the world adding up to 7,516 km, consisting of the mainland, Lakshadweep and the Andaman and Nicobar Islands. However, several areas have poor infrastructure and connectivity. Observers say major development projects are necessary to match the beaches of the Maldives. A comprehensive and sustainable tourism strategy, taking into account the unique characteristics of India’s coastal regions, is essential should India strive to become a coastal tourism hub. — Abhishek Sharma 14 | BW BUSINESSWORLD | 27 January 2024 Photograph by ePhotocorp / CANVA Photograph courtesy: Lok Sabha TV
15 | B W BUSINESSWORLD | 27 January 2024 THE MARKET IS ALIVE w i t h excitement. Throngs of investors e a g e r l y e x p l o r e p r o m i s i n g opportunities in Ayodhya in the run up to the grand inauguration of the Ram temple. Emerging as early leaders, over half a dozen townships and more than a dozen private hotels have secured local approvals, becoming pioneers in the city’s transformative j o u r n ey. A s to u n d i n g l y, p r i va te investments exceeding Rs 5,000 crore have already been earmarked for Ayodhya and its environs, according to local government officials. An additional wave of enthusiasm is evident, with projects surpassing Rs 4,500 crore progressing through various stages of presentations, documentation, and subsequent approvals. During his recent visit to witness the international airport’s p r o g r e s s , P r i m e M i n i s t e r M o d i enthusiastically gave the green light to a myriad of projects, collectively valued at several thousand crores. This celebratory momentum echoes the transformative buzz experienced d u r i n g t h e m o d e r n i s a t i o n a n d redevelopment of Varanasi some years ago, where the results are now tangible and experiential. —Ashish Sinha Investment Buzz MICROSOFT’S BRIEF OVERTAKE of Apple as the world’s most valuable company reflects the contrasting trajectories of these technology giants. Microsoft’s strategic investments in generative artificial intelligence (AI), particularly through its association with OpenAI, have propelled its stock and fortified its position in the market. On the other hand, Apple grapples with weakening demand, especially for its flagship iPhone, and faces challenges in key markets like China. T he divergent per formances are highlighted by Microsof t ’s positive momentum and Wall Street ’s favourable outlook, boasting no “sell” ratings and widespread buy recommendations. In contrast, Apple contends with the scepticism of analysts, with two “sell” ratings and a less unanimous “buy” sentiment. As Microsoft leverages advancements in AI to bolster its business, Apple contends with market challenges, reflecting the volatility inherent in the competitive tech sector. The stage is set, and the script is flipping – it’s a tale of AI-fueled ascent versus demand-driven descent in the ever-dynamic world of tech supremacy. The question looms: will Apple prevail? — Rohit Chintapali NOT APPLE’S YEAR? Photograph Courtesy: Shri Ram Janmbhoomi Teerth Kshetra
18 | B W BUSINESSWORLD | 27 January 2024 ASHINGTON HAS TIGHTENED its tourniquet around China’s technology sector. When Chinese President Xi Jinping met US President Joe Biden last month at the Asia Pacific Economic Cooperation (APEC) forum in San Francisco, he was noticeably conciliatory. Gone was the “wolf diplomacy” aggression that Xi had made part of China’s foreign policy. The reason: China’s star has dimmed. Foreign firms are not yet fleeing China because they are still too heavily invested in it. But while decoupling is not an option, de-risking is increasingly a necessity for global firms operating in China. Beijing’s tough new laws governing foreign firms have soured the mood even as China’s economy slows. Foreign direct investment (FDI) in China in July-September 2023 recorded, for the first time since 1998, a nett outflow of $11.8 billion. The broad signals from the West are negative as well. Italy recently announced that it was dropping out of Xi’s signature global infrastructure project Belt and Road Initiative (BRI). The news prompted a furious response from Beijing which accused the West of smearing BRI. But it was Xi’s brief meeting with Biden in San Francisco that revealed China’s growing vulnerability. The New York Times noted: “Xi voiced his longest and loudest protests about the cut-off of the fastest computer chips, which Biden responded would help the Chinese military. The two leaders were at fundamental odds on the issue: What Xi sees as economic strangulation, Biden sees as an issue of national security.” China’s official media was quick to hit back. It pointed out that “China’s development is driven by innovation, and stifling China’s technological progress is nothing but a move to contain China’s high-quality development and deprive the Chinese people of their right to development.” Official estimates put China’s GDP growth in 2023-24 at 4.9 per cent on a low base. But with the real estate sector – which accounts for over 30 per cent of China’s economy – in deep crisis, average annual growth beyond 2024 may dip to three per cent. Till last year, analysts were predicting that China would overtake the US as the world’s largest economy by the early 2030s. Now many economists believe China is headed for the sort of long-term economic ennui that Japan slipped into in the 1990s. As a result, Japan’s economy has stagnated. In 1990, Japan’s GDP ($3.13 trillion) was over half as large as the US economy ($5.96 trillion) and growing faster. Nissan and Sony dominated US marketshare. Experts believed Japan’s economy would overtake America’s by 2000. History can be a cruel leveller. By the early 1990s, Japan’s growth had stalled to nearly zero. Thirty years later, in 2023, its economy ($4.23 trillion) is barely one-sixth America’s ($26.90 trillion). US Tech War On China W Minhaz Merchant COLUMN MINHAZ MERCHANT The writer is the biographer of Rajiv Gandhi and Aditya Birla and author of The New Clash of Civilizations (Rupa 2014). He is founder of Sterling Newspapers Pvt Ltd., which was acquired by the Indian Express Group
27 January 2024 | B W BUSINESSWORLD | 19 Geopolitics & Geoeconomics The US-China tech war has geopolitical implications. With 2024 being an election year in the US, Biden and his likely challenger, former President Donald Trump, will compete to tighten the screws on Chinese technology. Much too will depend on the Taiwan general election due on January 13, 2024. If the anti-China Democratic Progressive Party (DPP) retains power, Beijing’s plan for a peaceful reunification with the island that lies just 100 miles off the mainland will face a setback. Will China mount an amphibious military invasion of Taiwan as it has threatened to do if reunification negotiations don’t work? The grinding wars in Ukraine and Gaza might dissuade Beijing from launching a full-scale assault till its economy stabilises. Victory for the pro-China Kuomintang (KMT) will greatly boost China’s ambition to work towards a blueprint for a peaceful takeover of the rebel island. India will need to nuance its position in a rapidly changing world. The US has been privately unhappy with India’s assertive leadership of the Global South. For Washington, there are only binaries: us and them. The Global South does not fit into this matrix. The US needs India on its side to help police the wide arc between the Gulf of Aden and the Malacca Strait. But an assertive, independent-minded India grates on the Washington bureaucracy and its retinue of neo-cons. They have deep ties with the military-industrial complex (MIC). The US has so far pumped $260 billion of military aid – five times India’s annual defence budget – into Ukraine’s war with Russia. The money has not gone directly to Kyiv but to US defence contractors like Lockheed Martin, Raytheon Technologies and General Dynamics. Ukraine gets the hardware. US firms get the money. India’s neutrality over Ukraine continues to annoy Washington. The US has defended the proscribed terrorist Gurpatwant Singh Pannun instead of prosecuting him. Whether or not Pannun is a CIA asset as widely reported, he serves Washington’s aim to keep India guessing. The economic war on China consumes US attention. But the outcome Washington most fears is India developing silently over the next decade into an economic powerhouse like China. A report released last month by leading brokerage house CLSA predicted that India’s economy, at $45 trillion, will surpass America’s GDP in 2052. The report has caused disbelief and annoyance in the warrens of Washington’s deep state. China is unlikely to meet Japan’s fate. But like Japan in the 1990s, it too is an ageing country with a shrinking population. History doesn’t always repeat itself. But China’s demographic vulnerability has been exposed by America’s tech war. As Nitin Pai, co-founder and director of think tank The Takshashila Institution, wrote in Mint, “Tech is where China hurts the most. Cutting off access to cutting edge semiconductors and production technology is a severe blow to the Chinese tech ecosystem, potentially setting it back by as much as a decade. The US can impose export controls, sanctions and manpower restrictions to contain China’s tech industry. Beyond restricting some rare earth exports, Beijing has little to retaliate with.” Photograph by Pe3check Till last year, analysts were predicting that China would overtake the US as the world’s largest economy by the early 2030s. Now many economists believe China is headed for the sort of long-term economic ennui that Japan slipped into in the 1990s
20 | B W BUSINESSWORLD | 27 January 2024 T HE RECENT PROPOSITION by N. R. Narayana Murthy advocating a 70-hour work week for Indian youth has reignited a complex dialogue encompassing labour dynamics, productivity, work ethics, and overall workforce well-being. This discourse is especially pertinent to India’s evolving socio-economic context, where traditional work practices are being re-evaluated in the light of technological advancements and shifting cultural norms. Integration of Technology: Murthy’s proposal compels us to reassess the effectiveness of increasing working hours against the need for a more profound transformation in our perception and execution of work. The integration of technology into the modern work environment adds layers of complexity to this conversation, addressing themes of efficiency, productivity, and the blurring boundaries between professional and personal life. Technological progress, while aimed at boosting productivity, presents a dual challenge. It acts as both a catalyst for efficiency, equally a significant source of distraction, particularly for the younger demographic. The omnipresence of smartphones, social media, and constant connectivity has blurred the lines By Vikas Singh The author is an economist and columnist between work and leisure, creating intricate and demanding work atmospheres. The Crux study offers a nuanced understanding of the dimensions shaping India’s socio-economic landscape. The comprehensive study conducted across eight cities, covering 15 major industrial and service sectors, surveyed 4,000 individuals, including 260 managers, business owners, sociologists, and influencers. This analysis extends beyond numerical data, delving into socio-economic realities, shifts in work cultures, and the overarching narrative of human well-being in contemporary India. Technology’s influence extends to reshaping traditional workplace boundaries and integrating leisure time with work responsibilities. While offering tools for increased productivity, technology also provides avenues for leisure and entertainment. This dual role creates a challenging environment where individuals, particularly the youth, struggle to balance the benefits of technology with its potential drawbacks. Development and Human Welfare: Remote work and flexible schedules, enabled by technology, blur the distinction between professional and personal life. Continuous access to work-related communications during leisure hours contributes to heightened stress levels and a perpetual sense of being ‘on call’. This evolving RETHINKING THE ETHOS OF LABOUR BALANCING ECONOMIC IMPERATIVES AND HOLISTIC WELL-BEING COLUMN Photograph by Fabizphoto
21 | B W BUSINESSWORLD | 27 January 2024 nities, and the nation. As we navigate the complexities of this discourse, it becomes evident that the narrative of productivity is more than just numbers. It involves social and economic factors that shape the overall path of national development and progress. Every stakeholder in the work chain is grappling with the evolution of work practices, linked to technological transformations, changing workplace dynamics, and the evolving expectations. Lessons from global experiments of flexible work hours, remote work policies, and employee-centric initiatives serve as valuable touchstones. The study acts as a poignant reminder of the interconnectedness between human welfare, economic prosperity and broader national advancement. It offers insights prioritising a balanced, inclusive work culture, employee well-being, professional growth, fosters overall advancement of society. As the dialogue expands, it underscores a nuanced and holistic approach to labour practices. The focus should shift towards enhancing work quality, fostering innovation, and creating a nurturing workplace culture that values not just long hours but also overall development and satisfaction of the workforce. Within the Indian socio-economic landscape, the study reveals underlying disparities and challenges that define the country’s labour dynamics. The ongoing discourse signifies the need for a comprehensive understanding of labour dynamics, work ethics and societal welfare, acting as a catalyst for collective action. The Crux study serves as a catalyst for introspection, reflection, and collective action, highlighting the critical need for a balanced, inclusive, and sustainable approach to workforce development. It emphasises an approach to workforce development that goes beyond numerical productivity. The Crux study underlines the intrinsic worth of employee well-being, equitable opportunities, and a nurturing work environment. These are the pivot to higher productivity and to holistic advancement of society. Every stakeholder in the work chain is grappling with the evolution of work practices, linked to technological transformations, changing workplace dynamics, and the evolving expectations work culture challenges traditional notions of work-life balance and demands a reassessment of our approach to labour. Fostering a sustainable work culture necessitates a balance that maximises the advantages of technological tools without compromising individual well-being. Global experiments with flexible work hours, remote work policies, and employee-centric initiatives provide valuable insights into creating a balanced and inclusive work culture. The study underscores the multifaceted nature of labour dynamics and the interdependencies between economic development and human welfare. Advocates for extended work hours emphasise dedication and personal growth, while critics highlight the risks of burnout and strained relationships. The Crux study extends its analysis to broader socio-economic issues, exploring discrepancies in pay, workplace dynamics and career advancement. It raises critical questions about equitable labour practices and the necessity of an inclusive work environment. The study points to the urgent need to address the rigorous work culture in India, marked by intense competition for jobs and educational opportunities, yet paradoxically coupled with low productivity. The significance of employee autonomy, work-life balance, and mental well-being is highlighted as integral to sustainable work cultures. Creating an environment that demands dedication, fosters creativity, and ensures overall well-being becomes paramount. An earlier Crux study noted that only a miniscule percentage of individuals successfully navigate India’s demanding higher-ed ‘admission’ system, often compromising their career choices, leading to poor workplace engagement and reduced productivity. Individuals, Communities, and the Nation: The discourse surrounding labour in India highlights the intersectionality between economic progress and societal welfare. It emphasises the necessity for a comprehensive approach to workforce development that considers the holistic advancement of individuals, commuPhotographby Igor Vetsushko
22 | B W BUSINESSWORLD | 27 January 2024 N A WORLD MARKED by disparities, the prospect of dismantling existing societal and economic frameworks to foster greater equality has been met with resistance, particularly from those enjoying abundance. Societal thinking around wealth is hard-coded with the idea of “we” not present in much of that wealth-debate. This is where the idea of abundance comes into play. When surplus resources are available, the scarcity principle, a foundational concept in economics, undergoes a transformation. Industries that previously operated under the constraints of resource limitations can now recalibrate their production models. For instance, in agriculture, an abundance of arable land and advanced farming technologies can lead to increased food production, challenging the conventional economic notions tied to scarcity-driven market dynamics. Abundance, when pragmatically leveraged, aligns with economic principles, providing a pathway to recalibrate societal and economic structures and address systemic inequalities. It is in the presence of ample resources that a remote but crucial chance for equality stands a chance. Abundance can serve as the catalyst for dismantling entrenched disparities, offering the necessary means to address systemic inequities. Well, humanity might have a chance at this sharing of abundance towards equality later this century itself. Just as advancements in modern science have propelled the global population to around eight billion, demographers foresee a zenith between 2050 and 2080, where 10 billion individuals might inhabit the planet. However, the subsequent trajectory post 2080, could take a distinctive turn, marked by a projected global population decline. Dean Spears, an economist renowned for his work at the Population Research Center at the University of Texas, has been instrumental in illuminating the potential consequences of global depopulation. His research and insights contribute significantly to our understanding of demographic shifts and their ramifications for societal structures. Spears emphasises that the anticipated decline in global population, even if the fertility rate stabilises at 1.5, could reshape the world as we know it. His work underscores the need to reimagine I The Abundance Challenge & Chance at Equality (A)muse & Musings By Srinath Sridharan & Shailesh Haribhakti Srinath Sridharan & Shailesh Haribhakti
27 January 2024 | B W BUSINESSWORLD | 23 to redistributive measures. Additionally, addressing systemic issues and promoting equal opportunities are crucial elements in the pursuit of a more egalitarian society. Nations with surplus resources may see shifts in influence and alliances. Strategic resource management will be a crucial tool in shaping diplomatic relations and global stability, influencing how countries collaborate or compete for a balanced global order. Achieving a state of ‘excess equality’, even with an abundance of resources, is intricate due to various factors ingrained in societal structures. Mere abundance doesn’t automatically translate into equitable distribution. To move towards greater equality, deliberate efforts are needed to address systemic disparities, promote inclusive policies, and dismantle barriers that hinder equal access to opportunities. In practice, achieving excess equality may involve implementing progressive taxation systems, investing in education and healthcare, and creating social safety nets. Additionally, fostering a culture that values diversity and inclusivity is crucial. Achieving true equality amidst abundance necessitates a concerted commitment to intentional policies and societal efforts. Mere surplus resources do not inherently guarantee equitable distribution. It demands a purposeful redirection of resources through carefully crafted policies that prioritise inclusivity and social justice. Progressive taxation systems, robust investments in education and healthcare, and the establishment of comprehensive social safety nets are indispensable components of this endeavour. Furthermore, dismantling barriers that obstruct equal access to opportunities and fostering a cultural ethos valuing diversity are essential. In the face of abundance, the road to genuine equality is paved by deliberate, sustained efforts at both policy and societal levels, acknowledging that addressing systemic disparities requires more than just an excess of resources – it requires a fundamental reshaping of the structures that perpetuate inequality. The notion of achieving equality will encounter scepticism. A potentially reduced global population creates a scenario where sharing abundance becomes not just a moral imperative but a practical necessity for fostering global equality. In essence, humanity’s chance at achieving equality lies in embracing the positive vision of abundance and actively working towards it in the decades ahead. While abundance can lay the foundation, a conscious and sustained commitment to social justice, along with comprehensive reforms, is essential to reverse inequality trends significantly. Even a remote chance of equality will arise only with abundance. That’s the core. And we have a chance at it, in the decades ahead. Excess of abundance alone will not guarantee equality, as other sociopolitical factors come into play. True equality often requires intentional policies, social frameworks, and a commitment to redistributive measures economic models, social policies, and resource allocation in anticipation of a future where abundance, rather than scarcity, becomes a defining feature. With a potentially reduced global population, the imperative to share abundance becomes even more pronounced. The excess resources that would have otherwise strained under burgeoning populations could now be redirected towards addressing systemic inequalities. This pivotal moment later this century holds the promise of a paradigm shift, where the ethos of sharing abundance becomes not just a moral imperative but a practical necessity for fostering global equality. The world, currently geared towards sustaining a population projected to reach 10 billion, would continue building resources in various sectors such as agriculture, housing, and social infrastructure. Any demographic reversal would prompt a fundamental shift in economic and societal structures. Industries heavily dependent on a large consumer base might face challenges, necessitating adaptation strategies for economic viability. Conversely, with a more manageable population, there could be opportunities for resource reallocation towards sustainable development, addressing environmental concerns, and fostering a more balanced global economy. Such a depopulation trend will need a strategic reassessment of policies, economic models, and social frameworks to ensure a smooth transition towards a world characterised by abundance and optimised resource utilisation. Excess of abundance alone will not guarantee equality, as other socio-political factors come into play. True equality often requires intentional policies, social frameworks, and a commitment Srinath Sridharan is a policy researcher & corporate advisor Shailesh Haribhakti is an independent director on corporate boards Photograph by Starlight789
24 | B W BUSINESSWORLD | 27 January 2024 HE ONGOING transformation of our world is undeniable, driven by a complex interplay of factors, including the pervasive influence of digitalisation and the evolving geopolitical landscape. These changes have shaped every sector. No facet of our lives has been left untouched, and the world of work is no exception. According to research from the McKinsey Global Institute (2017), demonstrated technologies can automate less than five per cent of all occupations. However, around 60 per cent of all occupations harbour have at least 30 per cent activities that are susceptible to automation. Additionally, the demographic landscape is also undergoing extensive transformations. As per the UNDESA estimates, by the year 2050, the total dependency ratio, which measures the ratio of the population aged 0-14 and 65+ per 100 individuals aged 15-64, is set to experience a substantial increase in Europe of about 24.8 percentage points. In Northern America, this ratio is expected to rise by 14.4 percentage points, and in Asia, the increase is projected to be moderate, at 8.5 percentage points. Demographic changes along with technological transformations, climate change, and the changing socioeconomic patterns of the world are together shaping the terrain of work in profound ways. Policies governing the world of work must focus on adapting to these transformations. Change has always been the only constant. Keeping this in mind, we must craft futuristic policies with the element of adaptability at the core. The G20 has been a platform where nations have come together to discuss topics and challenges of global concern. Labour and employment have long been subjects PREPARING FOR THE FUTURE OF WORK: ACHIEVEMENTS IN INDIA’S G20 PRESIDENCY integral to discussions in the G20. The New Delhi Leaders’ Declaration adopted by the forum this year covers an extensive array of global concerns, encompassing 87 deliverables and 118 adopted documents. It addresses a wide spectrum of topics, including Sustainable Development Goals, the Green Development Pact, women-led development, technological transformation, digital public infrastructure, the revitalisation of multilateralism, reforming Multilateral Development Banks, countering terrorism, and many others. A crucial aspect in this comprehensive document is a dedicated section which addresses preparing for the future of work. This is indicative of the prominent role of this subject within the G20 agenda. The presence of this section underscores the consensus among G20 countries on the importance of addressing the challenges and opportunities associated with the future of work. The G20 declaration reflects consensus among member nations reflecting in a range of commitments and statements ARTHSASTRA By Amit Kapoor & Amitabh Kant Clockwise from left : Amit Kapoor T & Amitabh Kant
25 | B W BUSINESSWORLD | 27 January 2024 that collectively aim to address skill gaps, promote decent work, and ensure inclusive social protection policies for all. The forum has taken the subject up on a priority basis. Firstly, G20 this year recognised the significance of having well-integrated and adequately skilled workers that can be beneficial for both origin and destination countries. According to an ILO report, the number of individuals who migrated internationally for work increased from 164 million to 169 million between 2017 and 2019. Acknowledging that skilled labour is advantageous to both origin and destination countries, Leaders committed to ensuring regular and skills-based migration pathways. The forum also underscored the significance of mapping global skill gaps and developing G20 policy priorities to address skill gaps on a global level. While there exist various means to do so, the G20 this year highlighted the need to strengthen national statistical data and extending the coverage of the ILO and OECD Skills for Jobs Databases to G20 countries, as appropriate. Additionally, mutual recognition of skills and qualifications is key to facilitate the mobility of professionals between countries. In this regard, G20’s commitment this year acknowledging the importance of developing an international reference classification of occupations by skill and qualification requirements, is important. In the area of skills, yet another crucial aspect that stands out is digital upskilling. In the face of technological advancements, the need for an agile or adept workforce is being felt now more than ever. A substantial investment is essential to facilitate lifelong learning, reskilling, and upskilling of workers in digital skills. Taking a step towards this investment, the G20 this year welcomed the comprehensive toolkit with adaptable frameworks for designing and introducing digital upskilling and reskilling programmes. This will go a long way in ensuring that skill development aligns with the modern workforce’s evolving needs. Universal social security coverage is imperative for mitigating as well as averting poverty and vulnerability through the life cycle. According to ILO, more than four billion people still lack any social protection. The G20, recognising the urgent need to alleviate this situation, made sustainable financing of universal social security coverage a key focus area in 2023. Leaders expressed their ambition to attain sustainably financed universal social protection coverage. They also underscored the importance of portability of social security benefits through bilateral and multilateral agreements. Considering that the world of work is witnessing a surge in new forms of employment including gig and platform workers, the forum’s recognition of adequate social protection and decent working conditions for gig and platform workers comes at a critical time. In conclusion, the G20’s commitments within the sphere of labour and employment reflect a comprehensive approach to addressing skill gaps and promoting decent work. In a world where the nature of work is undergoing massive transformations, along with the future of work, we must ponder what the future workforce looks like. The answer to this question hinges on our actions today. Amit Kapoor is Chair, Institute for Competitiveness and Lecturer, USATMC, Stanford University. Amitabh Kant is G20 Sherpa for India According to ILO, more than four billion people still lack any social protection. The G20, recognising the urgent need to alleviate this situation, made sustainable financing of universal social security coverage a key focus area in 2023 Photograph by Alexandra Lande
26 | B W BUSINESSWORLD | 27 January 2024 N THE 76 YEARS since independence, we have built just three or four new greenfield cities – despite the fact that our population has grown four times and the infrastructure in all old big cities is crumbling beyond redemption. The only new greenfield cities that I can think of are Chandigarh – built more than 50 years ago – Bhubaneshwar and Gandhinagar. There’s one more but I can’t recall the name. There are of course, extensions like Naya Raipur, Navi Mumbai, NOIDA, Rohini, Dwarka (all satellites of the megapolis Delhi, all clubbed as the National Capital Region or NCR). Too Few for Too Many Amravati was conceived when Andhra Pradesh was bifurcated. Hy - derabad was claimed by Telangana and so the CM of Andhra came up with the idea of building a new capital for his state, but it hasn’t really taken off. Dholera in Gujarat is yet another proposal to create an SEZ – a joint venture between the GOI and Gujarat but it is still a workin-progress. There are possibly a few more like this but the fact remains that all put together are just too few to provide living space for the burgeoning population, because of the constant migration from villages to cities in search of work opportunities and livelihood. Successive governments – especially the present one – have done awesome work towards building core industry, the IT and Telecom juggernaut that is the envy of the world, apart from IITs and IIMs. We have also expanded our railways and highways network, built a huge civil aviation infrastructure et al. Also, several world class factories in the private sector. However, very little attention has been paid to building new greenfield cities. Underserved Villages Migration from villages to cities is inevitable because our villages are not like those in the west. Most have poor connectivity, inadequate power in homes, no piped water, no sewage lines, very few schools and PHCs (Primary Health Centres) serving a cluster of several villages. Not only are these difficult to reach but most are also equipped pathetically, are housed in ramshackle buildings and often there are no teachers and doctors. At least one teacher in every primary school is present on paper but, in the absence of an attendance monitoring system, they are absent most of the time. They do turn up when some inspector is to visit. The same thing happens in the case of doctors. Despite the mandatory ‘rural posting for every government doctor’ they find ways to beat the system. Our only solution is to build many new greenfield cities. It is indeed a herculean effort and a very expensive one too, but there are no alternatives. Most of our big cities – Delhi, Mumbai, Chennai, Bengaluru, Hyderabad, Pune, Ahmedabad etc. have outlived their life cycle; we have just not upgraded their infrastructure, every square foot of available space has been built upon with zero attention to ‘natural drainage channels and retention of water bodies and green lungs. It is fine to take pride in heritage – the “world’s oldest living city” like Varanasi, to attract tourists – but what about basic civic amenities for the people living there? Besides, living with the filth and squalor, there are dangers to life with buildings collapsing every other day in the overburdened metros. It is high time that attention is paid to this aspect of national development. A few cities are indeed, planned along routes like the Delhi-Mumbai freight corridor and new highways, but these are just not enough. We need many more cities – and need them NOW. I We Need More Cities Sustainability / By Krishan Kalra Column The author is Trustee of The Climate Project Foundation, India, past president of AIMA and past BOG member of IIMC Photograph by Raffis
INSPIRED BY THE VISION FARM TO FIBRE TO FACTORY TO FASHION TO FOREIGN A MEGA CELEBRATION OF TEXTILE,TRADE,TECHNOLOGY & TRADITION 50 COUNTRIES 28 STATES 350 SPEAKERS Dive into discussions on sustainable practices, eco-friendly fabrics and circular economy solutions. KNOWLEDGE SESSIONS Witness runway shows featuring sustainable fashion, trendsetting designs and the latest in textile artistry. FASHION FORWARD Network with industry leaders, buyers & suppliers from around the world, opening doors to new opportunities & collaborations. GLOBAL CONNECTIONS INNOVATION SHOWCASE Explore cutting-edge textile technologies, materials and processes that are shaping the industry's future. 40,000+ TRADE VISITORS 3000+ OVERSEAS BUYERS 22,00,000+ SQ. FT. EXHIBITION AREA 3500+ EXHIBITORS KEY HIGHLIGHTS Register at www.bharat-tex.com New Delhi, India Venues Bharat Mandapam Yashobhoomi Follow us on: / bharat_tex / bharattex2024 / showcase/bharat-tex-2024-expo/ / Bharattex2024 For more information on the event / registration, scan this QR code NARENDRA MODI Prime Minister Register at www.bharat-tex.com TEXTILE,TRADE,TECHNOLOGY NARENDRA MODI Trade Exhibit Engage
28 | B W BUSINESSWORLD | 27 January 2024 Empathetic leaders recognise the unique challenges posed by demographic shifts. Whether it’s accommodating diverse generational perspectives or addressing the needs of a multigenerational workforce, an empathetic approach fosters an inclusive environment. Understanding employees’ varying life stages and priorities allows leaders to provide tailored support, enhancing the overall well-being of their teams. Enterprises face an increasingly challenging terrain marked by geopolitical shifts and transformative digital landscape, altering consumer behaviours. These interlinked dynamics are reshaping the very foundations of how business is conducted. Geopolitical uncertainties introduce new dimensions of risk, influencing market dynamics and supply chains. The integration of emerging technologies into the workplace adds another layer of complexity. Empathy, in this context, means more than just adapting to digital tools; it involves understanding the impact of technological advancements on employees. Acknowledging the learning curves, potential disruptions, and even concerns about job security positions leaders to guide their teams through the I N A QUIET OFFICE CABIN, three people are present. The supervisor leans forward and says, “Ashok, I have difficult but important news to share with you”. He pauses and then continues, looking at the other person present, “We reviewed your role, and it is no longer needed. We regret to share that your services are no longer required, effective today. The decision is final”. A long silence follows. Empathy in Leaders is a critical skill. When leaders demonstrate empathy, it fosters trust and strengthens relationships with team members. Employees feel understood, valued, and more connected to their leader. An empathetic leader creates an environment where team members feel safe to express themselves, share concerns, and take risks without fear of judgment. Empathetic leaders actively listen, paying attention to verbal and non-verbal cues. This aids in understanding the problems and needs of their team. It helps open dialogue and constructive feedback, which is essential for addressing challenges, resolving conflicts, and promoting innovation. They can readily understand their team’s motivations and align individual goals with organisational objectives, leading to a more engaged and committed workforce. Leaders can consider diverse perspectives and factors, leading to more comprehensive and well-informed choices. They can address underlying concerns by managing conflicts by considering multiple viewpoints and finding solutions. They set the tone for the organisational culture, and their behaviour influences how empathy is valued and practised throughout the company. Such leaders actively invest in the growth and development of their team members, recognising and supporting their professional aspirations. In the current era of shifting demographics, advancing technologies, and pervasive uncertainty, the significance of empathetic leadership in fostering employee well-being and productivity cannot be overstated. As the workforce landscape transforms, leaders who adeptly navigate these changes with empathy stand to create environments that resonate with the human experience. Empathy: a cost-effective currency of leadership that, though inexpensive, has the expansive power to enrich organisational culture, amplify team cohesion, and elevate the human experience in the workplace. Empathy Can be Expansive Leadership PEOPLE TALK By Srinath Sridharan & Steve Correa
27 January 2024 | B W BUSINESSWORLD | 29 cohesive work environment in unprecedented uncertainty. Empathy is the profound ability to understand and share the feelings of another, walking in their shoes with a genuine effort to comprehend their perspective. Empathetic leadership transcends traditional managerial roles by prioritising a deep understanding of the emotions and experiences of team members. It involves actively listening to their concerns, recognising their challenges, and responding sensitively. Unlike sympathy, which may involve feeling sorry for someone, empathy fosters a connection based on understanding rather than pity. Empathetic leadership embodies a respectful approach, recognising that each team member brings unique strengths and struggles. It promotes a workplace culture that values the human element, fostering trust, collaboration, and a sense of belonging among team members. Moreover, uncertainty has become a constant companion in today’s professional landscape. Empathetic leaders acknowledge the anxieties that accompany uncertainty and strive to provide reassurance. Communicating transparently, offering support, and demonstrating resilience in the face of ambiguity can have a profound effect on the mental well-being of employees. In navigating the unique challenges of the gig economy, empathetic leadership is paramount to understanding and addressing the constraints faced by freelance workers. Recognising the fluctuating nature of gig work, empathetic leaders can prioritise clear and transparent communication regarding expectations and timelines. Acknowledging the financial uncertainties, providing fair compensation, and offering flexible arrangements can contribute to a supportive work environment. For entrepreneurs, empathetic leadership involves recognising the multifaceted nature of building and sustaining a business. Acknowledging entrepreneurship’s inherent stressors and uncertainties, empathetic leaders can offer counsel that focuses on holistic well-being. In the professional arena, empathy isn’t just a virtue; it’s the strategic cornerstone that builds resilient teams, fosters innovation, and ensures the sustainable success of organisations in an ever-evolving landscape. digital evolution with sensitivity. As models of traditional employment embark on newer avatars, an air of uncertainty envelops the traditional professional existence. The advent of emerging technologies, including artificial intelligence, introduces a layer of ambiguity, prompting the need for reskilling and adaptability. The once stable career trajectories are now subject to disruption, requiring individuals to evolve and embrace new skill sets continuously. The future employment landscape is characterised by flux, and the challenges associated with aligning human skills with the evolving demands of technology heighten the sense of uncertainty for workers across various industries. Empathy is a vital catalyst for resilience and success in this volatile environment. Leaders and organisations capable of empathising with the uncertainties faced by employees and consumers are better positioned to navigate the complexities of geopolitical shifts and technological disruptions. Empathy fosters a workplace culture that acknowledges the individual challenges these changes bring, facilitating open communication, support structures, and opportunities for continuous learning. Cultivating empathy fosters resilience, adaptability, and a Srinath Sridharan is an author, policy researcher & corporate advisor Steve Correa is an executive coach, OD consultant & author Empathetic leadership embodies a respectful approach, recognising that each team member brings unique strengths and struggles. It promotes a workplace culture that values the human element, fostering trust, collaboration, and a sense of belonging among team members Photograph by Wizzard
30 | B W BUSINESSWORLD | 27 January 2024 T’S AN OLD STORY. But it’s one you must hear. Because it provides a little peep into how we think, why we do the things we do. And what we can all do to live happier lives. The story goes that there was an old man who lived in a house with a little garden. One day he was horrified to see his garden in a mess. Clearly someone had been running across and trampling on the grass and the plants. He was determined to find out who might have done it. A couple of days later, he found the answer. How Much Fun the Kids were Having A group of children were playing football in the area adjacent to his house. Every time the ball landed in his garden, one of the kids would jump in, pick up the ball and run back to his friends. Since this happened several times during the game, the garden was in pretty bad shape by the time the game was done. Upset and angry, he decided to give the kids a piece of his mind. He wanted to tell them to stop messing up his garden – or risk having the football confiscated. As he waited for them to finish playing so he could talk to them, he noticed how much fun the kids were having. He could tell they were having a blast. The old man had a change of heart. Instead of scolding the kids and telling them to stop, he called them all in and told them how happy he was to see them having a good time. Not just that. He gave each of the kids five dollars. ‘Keep playing, have fun,’ he said. Next week the kids were back. They played, had fun. The ball often fell inside his garden and they ran all over it. And when the game ended, the old man gave those kids five dollars. This went on for a few weeks. Until one day when the kids finished their game and came to the old man to collect their five dollars. And he said he unfortunately didn’t have any money to give. They went away disappointed. And that was the end of the football games. The kids stopped playing. We Get Used to the Reward Makes you think, no? Maybe there’s a little bit of that football loving kid inside each of us. We start off doing something we love. Then we start to get recognised and rewarded for it. We get used to the reward and the acclaim. And then without realising it, we continue to do it not because we enjoy it, but for the reward. And that’s when the trouble begins. The passion that got us started goes out of the window. And it becomes all about the five-dollar prize. Incentives can be tricky. Leaders and organisations need to ensure that there is an intrinsic motivation that makes their people come to work every day. Make sure they see a purpose. Make work fun. And fulfilling. If you rely on the incentive, or the bonus or the promotion to drive them – you could be in for trouble. There’s a version of the football game being played out in organisations – big and small. Good idea then to remind yourself why you started to play football. Enjoy playing. And don’t let those silly five dollars mess with your life. Football, Fun & Five Dollars I COLUMN Prakash Iyer : The author is a speaker and leadership coach and former MD of Kimberly Clark Lever PI TALKIES BY PRAK A SH IYER MAKE WORK FUN. AND FULFILLING. IF YOU RELY ON THE INCENTIVE, OR THE BONUS OR THE PROMOTION TO DRIVE THEM (EMPLOYEES)– YOU COULD BE IN FOR TROUBLE
fiffffl fiff fflffifl FEBRUARY 24, 2024 Breaking down the Interim Budget The most definitive ranking of India's largest 500 companies India's Emerging Entrepreneurs Under 30 Post-Budget 2024 Opinion Articles From Industry Leaders Regular Features & Columns Issue Highlights Block your pages... Ensure Your Brand’s Presence in this Special Issue!!! Aparna Sengupta, [email protected], +91 9958000128 Anjeet Trivedi, [email protected], +91 9818122217 Ravi Khatri, [email protected], +91 9891315715 CS Rajaraman, [email protected], +91 9342262859 Somyajit Sengupta, [email protected], +91 9818247444 Kiran Dedhia, [email protected], +91 9833399009 Sajjad Mohmmad, [email protected], +91 9911855935 Shruti Arora, [email protected], +91 7982628913 Deepak Bhatt, [email protected], +91 9429423232 Faizuz Ahamed, [email protected], +91 9820668333 Santosh B Singh, [email protected], +91 9820129879 Nitin Pawar, [email protected], 9456639006 fifffflffiflfflffifflffffl flflff For Editorial: Noor Fathima Warsia, [email protected] KNOWLEDGE PARTNER
32 | B W BUSINESSWORLD | 27 January 2024 LT Foods has continued its dominance in the domestic market with leadership in specialty rice and the competitive Basmati segment, while expanding presence in more than 60 countries. What’s driving this growth? By Ashish Sinha NDIA MAY BOAST of all kinds of exotic rice varieties, but none sit on the dinner tables with as much pride as the Basmati, which is prized for its exquisite form and fragrance, not just in India but the world over. In fact, Basmati for long has been a major constituent of Brand India, and one of the country’s key exports, thanks largely to the efforts of companies like LT Foods (LTFL), a leading rice exporter. “We are a leading Indian-origin global FMCG company,” says Ashwani Arora, Managing Director and Chief Executive Officer, LTFL. Arora’s claims are not exaggerated. The company has seen high growth due to growing consumption of quality Basmati rice in both domestic as well as global markets. At the current rate of growth, the company’s revenue is projected to cross Rs 11,000 crore over the next 48 months. Sitting in his large meeting room on SPREADING THE AROMA I the second floor of his Gurugram headquarters, Arora exudes confidence. “We are generating 84 per cent of business from brands like Daawat, Royal in the US. Over 70 per cent of our revenue is coming from exports,” he says. At the group level, LTFL clocked revenues of nearly Rs 7,000 crore in FY23. Before FY27, it is aiming to add another Rs 4,000 crore, for which Arora has all the plans chalked out. Analysts at HDFC Securities describe LTFL as “one of the most successful Basmati rice players in the US and EU markets”. According to a senior analyst, “The company is amongst the few players in this space to invest in a rice processing facility in Europe (Rotterdam) and a packaging unit with ready-to-heat facility in the US. It has a dominant market share of over 50 per cent in the US.” HDFC Securities, in its latest report, has given positive recommendations IN DEPTH CORPORATE
27 January 2024 | B W BUSINESSWORLD | 33 “We work with farmers to grow sustainable and residue-free basmati rice as per the SRP standards. All farmers taking part in our outreach initiatives are given training and exposure to every aspect of SRP” LTFL is also looking at enhancing its product mix with higher focus on margin accretive premium Basmati export business and plans constant scale-up of new launches in value-add segment. “In our view, LTFL’s revenue and PAT is likely to record a growth of 14 per cent and 32 per cent CAGR over FY23-25E,” says Sheth. Ventura Securities, in its report August last year, also supported a healthy based on current and past performance. “LTFL’s earnings grew at a CAGR ~16 per cent over FY19-23. Going forward, we are positive on the future growth prospects of LTFL which is mainly on the back of its robust distribution network, strong brand equity and constant endeavour to enrich their product portfolio by expanding into newer categories,” says H. Sheth, Fundamental Research Analyst, HDFC Securities. growth outlook for LTFL. “On the back of growth triggers, we expect LTFL’s revenues to grow at a CAGR of 10.9 per cent to Rs 9,464 crore over the period FY23-26,” it said. Rs 10,000 crore revenue does not look difficult, after all. International Expansion LTFL’s growth plans across markets are riding on the strong brand equity of its flagship brand, Daawat, which has Photograph by Karissaa
34 | B W BUSINESSWORLD | 27 January 2024 over 30 per cent market share in India. “The number of Daawat consuming households in India has risen to nearly 5 million. It is one of the most loved and consumed Basmati brands in India and in more than 80 countries,” says Arora. But what are the steps LTFL is taking to strengthen its position in key international markets? “We focus on geographies that are politically stable and with high growth potential for all our business categories. Aligned with this strategy, we pursued global expansion through a mix of both organic and inorganic routes,” Arora says. He points LTFL’s Royal ready-to-heat brand that has emerged as the fourth-largest brand in the US clocking over 37 per cent sales growth in FY23 over FY22. Besides, Arora talks about the sustained expansion of products in the modern retail channel like Walmart. “Last year, we acquired a 51 per cent stake in Golden Star Trading Inc., which sells Jasmine rice in the US. Through this acquisition, we have gained a strong foothold in the jasmine rice market, which is more than three times the size of the Basmati rice market in the US,” he informs. In 2016, LTFL acquired Rozana and Indus Valley brands from Hindustan Unilever, making its entry into the markets of Oman, Qatar, and Bahrain. This move not only fortified LTFL’s presence in traditional export hubs like Saudi Arabia, UAE, and Kuwait but also resulted in a 16 per cent year-on-year revenue surge in FY23 from this region. LTFL also entered the Canadian market through the acquisition of 817 Elephant brand. “Our journey with Walmart’s private label Basmati and the 817 Elephant brand has been nothing short of splendid, boasting a remarkable 59 per cent increase in FY23 compared to FY22,” says Arora. In Europe, LTFL successfully implemented a greenfield strategy, establishing LT Foods Europe in the Netherlands IN DEPTH How were the last three years for you? Over the last three years, LT Foods has experienced a remarkable trajectory of growth, both in terms of topline and bottom line performance. This transformative journey has been underpinned by judicious investments amounting to approximately Rs 400-430 crore, strategically directed towards expanding our production capabilities and fortifying operational efficiency. How do you plan to meet the target of Rs 11,000 crore revenue in the next few years? As we cast our gaze into the future, our forward looking capital expenditure plans anticipate an outlay in the range of Rs 700-800 crore over the next three years. It is with a clear vision and unwavering confidence that we approach these future investments, each playing a pivotal role in propelling us towards the ambitious milestone of surpassing a consolidated revenue of Rs 11,000 crore. Why are you diversifying the revenue streams? We are present across three segments/streams – Basmati and other specialty rice; organic food and ingredients; and convenience and health — in more than 80 countries. While further strengthening our core Basmati business, we also introduced regional rice such as DAAWAT® Kolam and DAAWAT® Sona ‘WE ARE WORKING TOWARDS EXCEEDING RS 11K CR IN REVENUE’ With a sustained outlay of Rs 700-800 crore over the next three years, LT Foods is eyeing a consolidated revenue exceeding Rs 11,000 crore, Ashwani Arora, MD and CEO, LT Foods tells Ashish Sinha: Excerpts. CORPORATE We have invested $10 million in a 51:49 joint venture with Japan-based Kameda Seika to manufacture, market and distribute rice-based healthy snacks in India, under the brand name ‘Kari Kari’ ”
27 January 2024 | B W BUSINESSWORLD | 35 in 2017. The investments in packaging expansion yielded significant returns, with this region contributing 19 per cent to the total revenue in FY23. Globally, LTFL is focused on strengthening distribution and expanding product reach, which resulted in an impressive 34 per cent growth in FY23. Notably, 6 per cent of total revenue comes from diverse countries, including the Far East, Israel, Mauritius, Fiji, Australia, Singapore, Maldives, Hong Kong, and New Zealand. Promoting Sustainability Notably, LTFL is a founding member of the United Nations-backed Sustainable Rice Platform (SRP) in India. The SRP is a multi-stakeholder platform co-convened by the United Nations Environmental Programme and the International Rice Research Institute to promote resource efficiency and sustainable trade flows, production and consumption operations, and supply chains in the global rice sector. “We work with farmers to grow sustainable and residue-free basmati rice as per the SRP standards. All farmers taking part in our outreach initiatives are given training and exposure to every aspect of SRP,” says Arora. By 2025, LTFL aims to train 50,000 farmers in sustainable farming methods. So far, more than 16,000 farmers have already been trained, the CEO informs. Now, LTFL is making efforts towards bringing 2.5 Lakh acres of organic farmland under sustainable cultivation by 2030. The company claims to have already done so with 1.64 Lakh acres of farmland, paving the way for healthier agricultural methods and a greener future. Peer Challenge KRBL, the world’s largest rice miller and promoter of India Gate Basmati rice, saw its domestic revenue grew 27 per cent in H1 FY24 on y-o-y basis. For the full FY23, its total income stood at Rs 5,456 crore with 26 per cent coming from domestic, and the rest from overseas. Between these two giant rice exporters, the India success story is shining bright in the overseas market. [email protected] Masoori to cater to the demands of consumers in different geographies. Convenience is another key trend. We have developed a range of easy-to-prepare, yet delicious and fresh meals, perfect for anytime-hunger. Our instant food products have been well received and contribute to our continued growth. Tell us about your recent JVs and acquisitions? We have invested $10 million in a 51:49 joint venture with Japanbased Kameda Seika to manufacture, market and distribute rice-based healthy snacks in India, under the brand name ‘Kari Kari’. To widen our market presence, we acquired a 51 per cent stake in Golden Star Trading Inc., which sells jasmine rice in the US This reflects our ability to thrive in a dynamic market. Full Interview on www.businessworld.in Ashwani Arora, MD and CEO, LT Foods
36 | B W BUSINESSWORLD | 27 January 2024 As the government gears up to present an interim budget in the run-up to the general elections, expectations build up within industry and the salaried classes of indications of tax sops and relief should the NDA come back to power By Ashish Sinha IT IS CUSTOMARY FOR AN INTERIM BUDGET to allocate funds for essential government operations, ongoing initiatives, and pressing needs, all the while avoiding introduction of new policies or schemes with substantial financial implications. Typically unveiled a few months before the general elections, it serves to cover government expenditures and sustain ongoing schemes during the transition till a new government takes on the reins. The interim budget may encompass estimates for government spending, revenue, fiscal deficit, financial performance, and outlook for the upcoming months but will be restricted from making noteworthy policy pronouncements that could weigh down the incoming government. India is on the verge of witnessing its fifteenth interim budget/vote-on-account, scheduled for February 1, 2024. With a total of 91 budgets since Independence, 14 have been presented as interim budgets or votes-on-account. Adhering to the Election Commission of India’s Code of Conduct, the ruling party is barred GREAT EXPEC I Photograph by Blackboard373 BUDGET BUZZ 2024
TATIONS WHAT’S EXPECTED ON 1 FEB.? n Estimates of Expenditure, income n Prioritise Fiscal Discipline n Avoid Popular Measures n Deductions u/s 80D may be hiked Simplify Capital Gains Taxation NIRMALA SITHARAMAN, UNION MINISTER OF FINANCE, 2024 Photograph courtesy: PIB
38 | B W BUSINESSWORLD | 27 January 2024 from proposing significant tax reforms in the interim budget to maintain the integrity of the voting process. At a recent public event, Union Finance Minister Nirmala Sitharaman underscored that the upcoming budget in February 2024 is geared towards meeting expenditure requirements till a new government takes charge. Characterised as a vote-onaccount, the budget is not anticipated to feature any spectacular announcements, according to the minister’s statement. In Anticipation The finance minister will present the interim budget 2024-25 on 1 February. It’s very likely that major announcements may be put on hold till after the 2024 Lok Sabha Elections. “The upcoming Union Budget presents an opportunity to address lingering concerns and set the stage for future economic growth. It is most likely that this budget would prioritise fiscal discipline and avoid populist measures,” says a senior tax consultant. However, there n No Change in Tax Slabs HIGHLIGHTS OF 2019 INTERIM BUDGET n Tax Rebate Limit under 87A increased n TDS limit hiked on Post Office Savings n TDS limit hiked on Bank Deposits n TDS threshold on rent increased n Govt increased sourcing from SMEs is optimism of potential relief in the realm of personal income tax, particularly in the New Tax Regime, the expert points out. Commenting on the fiscal economy and taking into account the fact that the upcoming event on 1 February will only be a vote-on-account, Aditi Nayar, Chief Economist, ICRA says that the capex target for FY2024, which was budgeted at Rs 10 trillion or 22.2 per cent of the total expenditure and 3.3 per cent of GDP, may be missed. “We have pencilled in a shortfall of Rs 750 billion in the FY2024 capex, which would still imply a robust y-o-y growth of ~26 per cent,” she says. S. P. Sharma, Chief Economist, PHD Chamber of Commerce and Industry, wants a slew of things from the budget. Foremost is the focus on reducing the costs of doing business. “The reduced costs of doing business and a level playing field in the country will increase the competitiveness of manufacturing firms and exporters, and reduce imports of the items where India has domestic capabilities,” says Sharma. “The budget must focus on reducing the costs of capital, costs of power, costs of logistics, costs of land /availability of land, costs of labour/availability of skilled labour and costs of compliance,” he goes on to say. His expectations are more from the full-budget expected in July but a direction for which, he expects, can be outlined by the finance minister on the first of February. Tax Sops Expectations The deduction limit under Section 80D for medical insurance premiums should be increased from Rs 25,000 to Rs 50,000 for individuals and Rs 50,000 to Rs 75,000 for senior citizens, reflecting rising healthcare costs. Easing of TDS compliance for home buyers could be addressed by the finance minister, exPIYUSH GOEL, UNION MINISTER OF FINANCE, 2019 Photograph courtesy: PIB BUDGET BUZZ 2024
27 January 2024 | B W BUSINESSWORLD | 39 parts, aiming for a more equitable tax structure. Vanesh Naidoo, Founder and Director of SafeCams, views the 2024 budget as an opportunity to strengthen the MSME ecosystem and empower startups for global competitiveness. Naidoo is optimistic that the budget will create a more vibrant entrepreneurial landscape in India. Dilip Modi, Founder of Spice Money, underscores the substantial expectations of the Indian fintech sector for the 2024 budget. Modi anticipates a key focus on fortifying the regulatory framework for fintech, guiding responsible growth and innovation in the sector – a focal point addressed in the upcoming budget. What Happened in 2019? The Union interim budget 2019 was presented by Finance Minister Piyush Goyal on 1 February 2019. Income Tax slabs remained the same for FY2020. But Goyal did announce some tax-related measures like no tax on notional rent of second selfoccupied house under “Income from House Property”; Tax Rebate Limit under 87A was increased from Rs 3.5 lakhs to Rs 5 lakhs for taxpayers. The maximum limit of the tax rebate increased to Rs12,500 from the present limit of Rs 2,500; TDS limit was hiked from Rs 10,000 to Rs 40,000 on Post Office Savings and Bank Deposits, targeting the salaried class and senior citizens while also increasing the TDS threshold on rent from Rs 1,80,000 to Rs 2,40,000; The Standard Deduction for the salaried class was also increased from Rs 40,000 to Rs 50,000. For the industry, SMEs with earnings below Rs 5 crore were given the assurance that their GST returns would be filed only once in three months. Then the requirement of sourcing from SMEs by government enterprises was increased to 25 per cent with three per cent reserved for women-owned SMEs. Some benefits of maternity leave of 26 weeks was announced as additional support for women. For the farm sector, the Minimum Support Price (MSP) was announced to be fixed at 50 per cent more than the cost for all the 22 crops among others. An analysis of the preceding four budgets, distinguishing between interim and final budgets, reveals a trend of preserving announcements and allocations, with the exception of the 2010 financial year, in the aftermath of the global financial crisis. This pattern raises anticipation that the upcoming interim budget too may play a pivotal role in shaping the future economic roadmap of India. ashish.sinha@businessworld HIGHLIGHTS OF 2014 INTERIM BUDGET n No Changes in Tax Regime NO MAJOR CHANGES IN: n Plan & NonPlan Exp. n Fiscal Deficit at 4.6% of GDP perts say. Nikhil Bhatia, Co-Founder & Chief Strategy Officer at HOP Electric Mobility, stresses the importance of a streamlined Production-Linked Incentive (PLI) scheme, seeking clarity in provisions to drive investment and growth. He advocates an expanded FAME II scheme, emphasising the need to incentivise technology transfer and manufacturing capabilities to position India as a global EV technology hub. Sameer Aggarwal, CEO & Founder of Revfin Services, hopes for a budget aligning economic growth with environmental responsibility. He envisions a future where renewable energy powers both homes and vehicles, calling it an investment in a cleaner, brighter tomorrow. Hari Kiran, Co-Founder and COO of eBikeGo, anticipates insights into the GST landscape for entry-level two-wheelers in the 2024 Budget. Kiran emphasises the industry’s call for a uniform five per cent GST on all EV spare n Revenue deficit at 3.3% of GDP P. CHIDAMBARAM, UNION MINISTER OF FINANCE, 2014 Photograph by Tarun Gupta
40 | B W BUSINESSWORLD | 27 January 2024 Despite the nature of a vote-on-account, there is an expectation of a positive government sentiment aimed at fostering economic consumption to sustain the upward trajectory of the “electoral economy” HE UPCOMING UNION BUDGET presentation is a vote-on-account, indicating minimal announcements, as articulated by the Honourable Finance Minister during industry engagements. The comprehensive 2024 budget will follow, post-election results. The current government has demonstrated a distinct approach in its handling of Union Budgets, steering clear of populist measures. Instead of opting for immediate financial outcomes, the emphasis has consistently been on strategic policies and long-term structural focus. The government has, when necessary, announced policies throughout the year rather than limiting key decisions to the annual budget. This strategic and measured approach indicates a commitment to fiscal prudence, and therefore, expectations remain that the forthcoming budget will adhere to the established pattern, prioritising enduring structural changes over short-term populist measures. Despite the relative strength of the Indian economy vis-à-vis global counterparts, it confronts sustained challenges arising from geopolitical complexities and adverse economic conditions globally. Notwithstanding its resilience, the economic landscape T COLUMN BUDGET BUZZ 2024 AUTHOR: Srinath Sridharan is a policy researcher & corporate advisor VOTE-ONACCOUNT, BEFORE THE BIG-VOTE remains marked by persistent challenges, notably in the realms of food inflation and rural sector growth. A prudent approach is imperative, considering the repercussions of fluctuating global oil prices and the dynamics of geopolitical narratives coupled with prevailing global protectionist trends. The forthcoming Union Budget presents an opportunity to address ongoing concerns and establish a foundation for economic growth. Anticipated in this vote-on-account, is a reinforcement of India’s steadfast dedication to prudent fiscal management through its policies. Confronted with economic intricacies and uncertainties on the global stage, maintaining financial stability and fostering sustainable growth necessitates an unwavering and resolute stance. Deviating from this rigorous fiscal approach poses the risk of compromising the substantial economic progress achieved through diligent efforts. Despite the nature of a vote-on-account, there is an expectation of a positive government sentiment aimed at fostering economic consumption to sustain the upward trajectory of the “electoral economy,” influenced by campaign-linked expenditures. The extent of the mandate in the upcoming national elections may dictate substantial reforms in simplifying the taxation structure within the Union Budget. Presumed is a thorough exploration of this direction through substantial research and
41 | B W BUSINESSWORLD | 27 January 2024 discussions over the last two government terms. Ensuring medium-term growth necessitates an expansion of capital expenditure. Given the volatility in global crude prices, expediting efforts to transition towards alternative fuel sources becomes increasingly paramount. The government’s critical emphasis on embracing advanced digital technology, manifested through expanded Production Linked Incentive (PLI) schemes and investments in human capital, holds pivotal importance. This is particularly notable considering India’s workforce is anticipated to surpass China’s by the year 2025. Further, the corporate sector anticipates the Reserve Bank of India (RBI) to uphold interest rates until the mid-year as a measure to control inflation. Although steadfast control over interest rates supports long-term economic growth, it concurrently presents challenges for companies seeking capital raising. The forthcoming budget is expected to significantly prioritise the promotion of ‘Make in India,’ possibly involving revisions to customs duty rates and the implementation of phased manufacturing plans customised for specific sectors. The government’s emphasis on growth strategies is unmistakable, as demonstrated by enhancements in road connectivity, advancements in transportation infrastructure, and the localisation of imports. These strategic focus areas are set to continue and may witness an escalation in budgetary allocations. Traditionally falling behind in healthcare investment, India requires urgent enhancement, particularly in the light of the lessons learnt from the pandemic. Anticipated are proactive measures, including incentives linked to healthcare service delivery and quality assessment, aimed at attracting increased investments. The industry would welcome initiatives encouraging the adoption of health insurance. With India’s heightened focus on clean energy objectives, the renewable energy sector is keenly awaiting measures in Union Budget 2024 that foster indigenous development, facilitate technology transfer, and incentivise local manufacturing initiatives. The upcoming budget is expected to introduce policies aimed at ensuring that earnings of senior citizens have lesser or no tax. Currently, senior citizens under the old income tax regime enjoy an exemption limit of Rs 3 lakh, while it is five per cent under the new tax code. Despite senior citizens over 75 being exempt from filing tax returns, the income tax remains deductible by the paying bank for those with pension and interest income. The basis for a tax-free status argument is that given the absence of a social security cover, pensions should either be made tax-free or be allowed a deduction for the principal component, as the pension premium is already funded through taxable income. The annual anticipation from the Union Budget includes an expectation for an increase in standard deductions and expanded deductions for home purchases. Aligned with the government’s emphasis on affordable housing, incremental incentives could be incorporated. In the era of rising electric vehicle (EV) ownership, extending higher tax incentives for EV owners could expedite the transition to a market with a larger proportion of EVs. The empowerment of women and the encouragement of increased workforce participation can act as catalysts for GDP growth. Tailored credit schemes supporting women’s entrepreneurial ventures, coupled with policies fostering gender equality, have the potential to empower women to actively pursue entrepreneurial endeavours, particularly within SMEs and MSMEs. To facilitate this, MSMEs require improved access to finance, simplified tax slabs, and streamlined compliance processes. The industry’s deficiency in not having formally regulated SROs (Self Regulatory Organisations) impedes its skill enhancement for competitiveness and export attractiveness. While the previous budget allocated funds to the RAMP scheme, on-ground outcomes underscore the need for the establishment of SROs to overcome bureaucratic hurdles. A newer developmental mindset is essential for credit access to SMEs and MSMEs, which currently face limitations with incremental lending increases annually, as a banking sector checklist. While steering clear of populist budgetary measures, the imminent vote-on-account provides a strategic opportunity to intensify focus on pivotal sectors such as women’s empowerment, gender equality, agriculture, and MSMEs. In the lead-up to the elections, addressing these segments proves politically astute, aligning with broader societal and economic interests. Offering incentives in these areas not only demonstrates prudent electoral strategy but also strategically places critics in a challenging position. Opposition to measures supporting women, gender empowerment, agriculture, or MSMEs could be perceived as contrary to popular sentiments and societal well-being. This approach facilitates a nuanced and politically advantageous alignment of policies with the electoral landscape. Photograph courtesy: PIB
42 | B W BUSINESSWORLD | 27 January 2024 All eyes would be on how the government reconciles the need for capex expansion with the ongoing fiscal consolidation in Budget FY25 HE INCUMBENT GOVERNMENT IS SET TO present an Interim Budget on February 1, 2024 before the election season sets in. The macroeconomic backdrop is rather favourable; GDP growth projections for FY24 have been revised upwards, average CPI inflation is set to moderate, and the current account deficit remains modest. The fiscal deficit target for FY24 in absolute terms is also likely to be met, in spite of this being a pre-election year. The timing is opportune to plough ahead with continued fiscal consolidation, with all indications that the benign domestic economic environment will sustain in FY25. The upcoming budget is set to be an interim one for the purpose of a vote-on-account, rather than a full budget, which is the norm prior to parliamentary elections. This effectively implies a sanction of parliament for withdrawal of money from the Consolidated Fund of India to meet the government’s expenses, for a period of up to four months, before a full budget is presented. Given this, major policy changes are unlikely at this juncture, and the market participants should ideally moderate their expectations from the upcoming voteon-account. Nevertheless, the overall budget math would be closely watched, both the outturn for FY24 and what is penciled in for FY25. Of keen interest is the balance that is sought between fiscal consolidation and capex expansion, which compete with each other over the short term, even as they complement each other over the longer term. This is particularly important given the crucial role that rising government capex has played in supporting growth over the last few years. Modest Revenue Growth ICRA forecasts the nominal GDP growth at ~9.5 per cent in FY25. We have penciled in a moderate 11.1 per cent growth in gross tax revenues in FY25, implying a tax buoyancy of 1.2x, in line with that seen during FY15-19. We are not as optimistic around non-tax revenues and have projected a modest decline in the same in FY25, over a mildly higher-than budgeted print expected in FY24. We have assumed a disinvestment target of Rs 500 billion for FY25 in our revenue calculations, similar to the A TIGHTROPE WALK T COLUMN BUDGET BUZZ 2024 AUTHOR: Aditi Nayar, Chief Economist, Head- Research & Outreach, ICRA
27 January 2024 | B W BUSINESSWORLD | 43 The government had earlier set a medium-term target of restricting the fiscal deficit to around 4.5 per cent of GDP in FY26. With the fiscal deficit likely to eventually print at around 6.0 per cent of GDP in FY24, it would be prudent to attempt to bridge half the required consolidation in the coming year, and budget for a deficit of around 5.3 per cent of GDP amount that was budgeted for the ongoing fiscal. A number higher than this may be considered unrealistic by the markets, given the actual realisation over the last few years, and the likely sizeable miss expected in the current fiscal even from this modest target. On the expenditure side, we believe that the Government of India (GoI) would be able limit the growth in its revex to ~4 per cent in FY25, aided by a muted growth in its subsidy burden, albeit on a higher-than-budgeted turnout in FY24. Moreover, it is likely to pencil in an amount of Rs 600 billion for the National Rural Employment Guarantee Scheme, similar to that budgeted for FY24. However, the actual spend is likely to be much higher, as is the case in the ongoing fiscal, with the additional funding requirement likely to be met through supplementary demand for grants in the latter part of the year. This brings us to the most anticipated item in the budget—the GoI’s capex, which has dominated headlines over the last few years. For instance, in FY19, the GoI’s on-budget capex stood at Rs 3.1 trillion, 13.3 per cent of the total expenditure and 1.6 per cent of GDP. As against this, capex for FY24 was budgeted at a massive Rs 10.0 trillion, 22.2 per cent of the total expenditure and 3.3 per cent of GDP. On account of the imminent onset of the model code of conduct, as well as a gap between the budgeted, approved and released amount under the capex loan scheme to the states, we fear that the FY24 capex target could be missed. We have penciled in a shortfall of Rs 750 billion in the FY24 capex, which would still imply a robust YoY growth of ~26 per cent. Fiscal Deficit Target The government had earlier set a medium-term target of restricting the fiscal deficit to around 4.5 per cent of GDP in FY26. With the fiscal deficit likely to eventually print at around 6.0 per cent of GDP in FY24, it would be prudent to attempt to bridge half the required consolidation in the coming year, and budget for a deficit of around 5.3 per cent of GDP. Based on our estimates of receipts and revenue expenditure, we think this fiscal deficit target would allow for a budgeted capex of Rs 10.2 trillion in FY25, a relatively sedate YoY expansion of 10 per cent . While this sharp slowdown in capex growth would weigh on the pace of GDP expansion, a larger outlay would impinge on the GoI’s ability to curtail the fiscal deficit to 5.3 per cent of GDP from the 6.0 per cent expected in FY24. The tradeoff is as follows; every 10 bps of expansion in the fiscal deficit-to-GDP ratio would allow for additional capex of ~Rs 324 billion in FY25. However, this would make achieving the medium-term target in FY26 that much more challenging. Photograph by Styfe
44 | B W BUSINESSWORLD | 27 January 2024 In the background of slower domestic growth amid softening global demand, the interim budget could lay the path on which the full budget could tread S ANOTHER FISCAL DRAWS TO A CLOSE, the Indian economy has displayed remarkable resilience and weathered many a global storm. The advanced estimates of the government place growth in fiscal 2024 at 7.3 per cent, a tad higher than 7.2 per cent in fiscal 2023. Fixed investment clearly stood out as the primary growth driver, with its share of GDP touching an all-time high of 34.9 per cent. Export growth tanked in line with global demand jitters, while government consumption continued to level out after the surge during the pandemic years. Private consumption, however, was a huge disappointment, growing only 4.4 per cent in fiscal 2024, after expanding 7.5 per cent in fiscal 2023. As a result, the share of private consumption in GDP has dropped to 56.9 per cent from the peak of 58.5 per cent last fiscal. This was somewhat expected, with the post-pandemic pent-up demand normalising and with inflationary pressures — especially on food — eating PRESAGING THE PRONOUNCEMENTS A COLUMN BUDGET BUZZ 2024 About the Author: Dipti Deshpande is Principal Economist and Bhavi Shah is Economic Analyst, CRISIL. Views are personal
27 January 2024 | B W BUSINESSWORLD | 45 into consumers’ purchasing power. What is concerning though is high-frequency data suggests much of the slowdown is from the rural economy, which has taken several hits. First, the normalisation of rural spends post-pandemic with some rural employment generating schemes, such as PMGSY, PMAY and NREGA, witnessing lower increase in allocation versus the pandemic period. Second, monsoon woes that have hit agricultural output, yields and hence incomes. Third, some impact on agriculture incomes coming from export curbs on agricultural commodities such as rice, wheat, and onion. Fourth, high inflation (rural food inflation so far in fiscal 2024 averages 8.4 per cent), which negatively hits the terms of trade for farmers as much of the increase in food inflation is due to demand-supply gaps and not because the farmer is getting a proportionately high price for his produce. CRISIL expects GDP growth to slow to 6.4 per cent in fiscal 2025, driven by slower global growth further affecting our exports, tighter domestic financial conditions as the RBI’s past rate hikes see a lagged pass-through in the economy, and geopolitical uncertainty keeping business environment cautious. In this slowing growth backdrop, there seem to be two imperatives for the government to support the economy in the short-term. One is to help revive rural demand — either through welfare schemes or via employment generating schemes. Second is to continue spending on infrastructure and keep that driver of economic growth going. In doing so, the biggest challenge is reducing the fiscal deficit, which is almost at 6 per cent of GDP in the ongoing fiscal. Achieving the slated target of 4.5 per cent of GDP by fiscal 2026 will require some expenditure growth moderation in addition to revenue augmentation. While GST revenue has provided good support, slower economic growth could slow down revenue collection. The forthcoming budget on February 1 is an interim one / a vote on account to be announced by the incumbent government before the country enters the election period, to be held in April-May. The full budget will be presented after the new government is formed. An interim budget allows for income and expenses to be incurred during the transition period but proposes these for the whole year. The new government has the power to agree or modify these for the rest of the year. In this context, two key questions come to mind. Should the expectations be as high from an interim as a regular budget, as the latter will be finalised only mid-year? What has been the experience of past interim budgets? Are there large variances with the final budget? A look at past interim budgets throws up some interesting things. First, though interim budgets typically avoid announcing new schemes and major tax changes, some instances show there is scope to do so. For instance, the interim budget for fiscal 2020 saw the launch of the PMKisan scheme. Therefore, one cannot entirely rule out the possibility of new measures being announced. Second, a comparison of the last four budgets (interim vs final) shows that except for fiscal 2010 (which was in the aftermath of the global financial crisis), announcements and allocations made were broadly preserved — there was, at most, a within 10 basis points difference in fiscal deficit to GDP numbers, minor increases in revenue receipts numbers and allocations to large schemes such as NREGA were kept unchanged. Interestingly, this was observed even in years of regime change (fiscals 2005 and 2015). That suggests minimum variance in allocations in the interim and the final budgets. Moreover, the budget is not the only avenue that allows the government to make announcements, provided the expenditures under new announcements during the year are managed within the ambit of the budget-announced accounts. That said, we believe there is little chance for any new expenditure or revenue announcements to come by in the final budget that could distract the country from the path of fiscal consolidation. In the background of slower domestic growth amid softening global demand, the interim budget could lay the path on which the full budget could tread. Photograph by Pixxelstudio91
46 | B W BUSINESSWORLD | 27 January 2024 The budget must focus on reducing the cost of doing business and a level playing field in India will increase the competitiveness of manufacturing firms and exports BOLSTER INDIA’S MANUFACTURING SECTOR COLUMN BUDGET BUZZ 2024 HE UNION BUDGET 2024-25 is being presented at a crucial juncture of geopolitical uncertainties, geo-fragmentation, high interest rates, and slowing world economic growth. Calibrated steps to enhance domestic sources of growth would be crucial to maintain a higher economic growth trajectory. The global economy continues its gradual recovery from the impacts of the Covid-19 pandemic, the Russia–Ukraine war, the Israel-Hamas hostilities, and the challenges posed by the rising cost of living. IMF projections suggest that global growth is decelerating from 3.5 per cent in 2022 to 3 per cent in 2023 and further to 2.9 per cent in 2024. Amidst all this, the Indian economy has proven resilient. Postpandemic GDP growth has remained high. GDP grew 9.1 per cent in 2021-22 and 7.2 per cent in 2023-23. The NSO estimates strong growth of 7.3 per cent in 2023-24 in its first advanced estimates. With the high growth trajectory, India’s commitment to a green economy was reflected in the Union Budget for 2023-24, which emphasised on renewable energy, reduced reliance on fossil fuels, and sustainability, aligning with a target of achieving net-zero carbon emissions by 2070. India has emerged one of the most attractive destinations for new ventures and investments. The government has made tremendous efforts to improve the ease of doing business in India through various initiatives and budget allocations. There is a need for more emphasis on Tier 2 cities, rural areas, and expanding digital connectivity for enterprises. The budget must focus on reducing the costs of doing business. The reduced costs of doing business and a level playing field in the country will increase the competitiveness of manufacturing firms and T AUTHOR: S.P. Sharma, Chief Economist, PHD Chamber of Commerce and Industry
The strengthening of the MSME sector, improving value chains, and increasing access to capital for small businesses would be crucial for their growth and contribution to the Indian economy 47 | B W BUSINESSWORLD | 27 January 2024 exporters, and reduce imports of the items where India has domestic capabilities. The budget must focus on reducing the costs of capital, costs of power, costs of logistics, costs of land /availability of land, costs of labour/availability of skilled labour and costs of compliance. India is emerging as a startup hub with more than 1,00,000 startups. Moreover, India has over 100 unicorns, which is amongst the largest in the world. To sustain this trajectory of startups and unicorns, a great deal of handholding is required for enhanced access to the government e-marketplace (GeM), technology and AI-based development, and strengthening incubation framework. The Logistics Backbone The logistics sector is the backbone of the functioning of all the other sectors of India’s economy. To improve logistics development in the country, the application of advanced technology must be focused on, including rail-road connectivity, IoT, automation, blockchain and cloud computing, AI, and robotics. The strengthening of the MSME sector, improving value chains, and increasing access to capital for small businesses would be crucial for their growth and contribution to the higher growth of the Indian economy. India’s services sector, notably software exports, has grown significantly, and to progress further, digital infrastructure, literacy, and skill development must be prioritised. Developing state-of-the-art tourism infrastructure is crucial for increasing the sector’s contribution to employment and MSMEs. Agriculture’s growth is dependent on rural infrastructure, private sector participation, and reduction of wastage. Infrastructure development is critical for India’s overall economic growth, to accomplish the state-of-the-art infrastructure and India’s development goals by 2047, infrastructure investment should account for at least 10 per cent of GDP. To enhance the momentum in private investments, there is a need to support the consumption trajectory as this will enhance capacity utilisation in the factories. Percolation of ease of doing business at the factory level, rationalisation of cost of doing business, rationalisation of taxation, state-ofthe-art infrastructure, enhanced incomes in the agriculture sector, inclusive health infrastructure, quality education, and employment creation in the economy will be crucial for India’s journey towards a developed economy by 2047. India’s labour force is characterised by a high proportion of employment in agriculture and the informal sector with nearly half of its workforce classified as working poor. At this juncture, there is an urgent need to create a highly skilled talent base and to ensure the formation of a strong human capital base ready to serve the nation. To ensure a strong health infrastructure, it is critical to address gaps in healthcare access, invest in highly competent medical professionals, and improve the quality of medical education. The strengthening of the healthcare personnel with specialised training and preparedness needs to be To generate employment in the economy, accelerated reforms in the agriculture and food processing sector are needed with a great infusion of public investments in the agriculture infrastructure. Reforms in rural infrastructure logistics and cold chain are required as they would help in increasing the level of the food processing industry and rural entrepreneurship. This would lead to increased participation in global agriculture and food exports. In a nutshell, time is most opportune to bolster the manufacturing sector with reduced costs of doing business and connect strongly with the global supply chains to strengthen India’s journey towards a developed economy. Photograph by Bivash Banerjee
48 | B W BUSINESSWORLD | 27 January 2024 I N TODAY’S INDIA, STARTUPS have emerged as a powerful engine of innovation and growth. With a renewed emphasis on entrepreneurship, future-ready individuals are now in the driver’s seat, poised to navigate the dynamic and ever-evolving world of business. These young visionaries, equipped with innovative solutions and a keen eye for emerging trends, are providing solutions for a plethora of challenges facing the nation. The bygone year was one of the toughest for startups. However, promoters with the right mindset and sticking to the fundamental tenets of business could sail through the turbulent times. As far as funding is concerned, it fell to its lowest in seven years. Fueling the entrepreneurial surge is digitalisation, which has paved the way for a wave of tech-focused startups, disrupting traditional industries and creating new opportunities for both entrepreneurs and consumers. From fintech solutions to edtech platforms, these digital ventures are transforming the way we live, work and interact with the world around us. To recognise and acknowledge the trailblazing entrepreneurs, BW Disrupt in association with BW Businessworld organised the seventh edition of the 40 Under 40 summit, a platform that brings together professionals and organisations involved in various domains of the startup ecosystem. The Process BW Businessworld reached out to over 500 industry leaders and received more than 150 entries. Subsequently, after a second level of deliberations, 80 nominees were shortlisted and invited to present before an esteemed jury panel. The nominees were presented before the jury to share their company’s journey, financial health, goals and ambitions. The nominations received for the BW Disrupt 40 Under 40 2023 underwent a meticulous multi-tier screening and shortlisting procedure to identify the most deserving winners. The winners were evaluated strictly on merit. The process adIndia’s most imaginative entrepreneurs under 40 years of age, who are disrupting the business landscape with their innovative startups By Nitesh Kumar THE SHINING STARS hered to a specific set of parameters for evaluating the entries, including major accomplishments, key contribution in the organisation, strategies for brand growth, leadership journey, weakness and strength and the rationale behind each nominee’s potential win. The Jury Aman Gupta, Co-founder & CMO, Boat Lifestyle, chaired the jury. Other notable members of the jury includedSudhakar Rao, Director - ICFAI Group of Educational Institutions; Nikhil Bhandarkar, Founding Partner, Panthera Peak Capital; Anup Jain, Leading Early Stage Investor; Ashish Singla, Co-Founder & Managing Partner, N+1 Capital; Rohit Rajput, Partner, Intersection Ventures; Jyoti Khetarpal, Entrepreneur-in-Chief (Founder), Briskcheck Solutions; Tej Kapoor, Managing Partner, IvyCap Ventures, Tariq Aboobaker, Managing Director, Amicorp Trustees (India) and Dr. Annurag Batra, Chairman & Editor in Chief, BW Businessworld and Founder, exchange4media. BW Disrupt 40 under 40 | OVERVIEW Photograph by Naval Kishor
49 | B W BUSINESSWORLD | 27 January 2024 THE WINNERS SL. No. WINNERS DESIGNATION COMPANY 1 Abhishek Dua Co-founder & CEO Showroom B2B 2 Abhishek Deshpande Co-founder & COO Recykal 3 Akash Agrawal Managing Director ZOFF Foods 4 Akshay Verma Co-founder FITPASS 5 Anant Tanted Founder & CEO The Indian Garage Company 6 Arjun P Gupta Founder & CEO Smart Joules 7 Arush Chopra Co-founder & CEO Just Herbs 8 Ashish Sharma Co-founder & CEO ZIEL Financial Technologies 9 Atul Monga Co-founder & CEO Basic Enterprises 10 Bharat Bhut Co-founder and Director Goldi Solar 11 Bhavik Vasa Founder & CEO GetVantage 12 Chirag Gupta Founder 4700BC 13 Devesh Bansal Director Skipper Limited 14 Dinesh Kumar Kotha Co-founder & CEO Confirm Ticket Online Solution 15 Kanika Dewan Director Shikhar Dhawan Foundation & Good Deed Relief Foundation 16 Sathvik Vishwanath Co-founder and CEO Unocoin 17 Gaurav Tripathi Group CTO Innoplexus 18 Gurmeet Singh Arora Co-founder & CEO Flax - Healthy Living 19 Harsh Binani Co-founder Smartworks Co-working Spaces 20 Himanshu Adlakha Co-founder Winston Electronics 21 Kapil Shelke Founder & CEO Tork Motors 22 Kaushik Srinivasan Co-founder eMudhra 23 Krishna Dushyant Rana Chairman & Managing Director Platinum Industries 24 Kunj Yadav Managing Director Yadu Corporation 25 Laurent Samandari Co-founder and CEO L’Opéra 26 Malini Adapureddy Founder & CEO The Deconstruct 27 Mayank Goyal Founder & CEO moneyHOP 28 Mayank Gupta Co-founder & COO Zopper 29 Mihir Gadani Co-founder OZiva 30 Nalin Saluja Co-founder & CTO Virohan 31 Nilesh Vishnu Ghule Co-founder & CEO LoadNow - Forza Logistics Techlabs 32 Nipun Marya Chief Executive Officer iQOO India 33 Nitin Viijay Founder & CEO Motion Education 34 Pawan Gupta Co-founder & CEO Betterhalf 35 Sangram Simha Datla Co-founder & CMO Incnut Lifestyle Retail 36 Shashank Sharma Founder & CEO Sunsure Energy 37 Sourabh Bansal Managing Director Magicrete Building Solutions 38 Subramanian Viswanathan Co-founder & CEO Disprz 39 Sukriti Sharrma Partner Plüsch 40 Udita Bansal Founder & CEO trueBrowns Lifestyle 41 Vinit Garg Founder & CEO Mylo 42 Vishal Pandya Co-founder REConnect Energy
50 | B W BUSINESSWORLD | 27 January 2024 RECYKAL, A HYDERABAD-BASED tech startup, is revolutionising the waste management ecosystem through its online platform by offering marketplace solutions for waste management. Recykal empowers buyers and sellers of scrap material and aims to build a self-sustaining circular economy in India. Recykal has secured $36.7 million in funding over seven rounds. In its latest round of Series A funding in September 2022, the company raised $7.36 million. The funding is crucial for the startup’s mission to divert at least five per cent of waste from landfills and promote recycling and reuse. Investors Investors in Recykal include Morgan Stanley, Bank of Singapore and Idea Entity. Morgan Stanley, which led the latest funding round, demonstrates confidence in Recykal’s innovative approach to waste management. The startup has five co-founders, Abhay Deshpande, Cofounder & CEO, Abhishek Deshpande, Co-founder and COO, Anirudha Jalan, Co-founder, Ekta Narain, Co-founder and Additional Director and Bhasmang Vidyutrai Mankodi. Recykal operates in the B2C and B2B segments within the Environmental Tech market. Waste Management Ecosystem With a focus on creating a comprehensive waste management ecosystem, it competes by providing endto-end solutions for waste centres and implementing Extended Producer Responsibility (EPR) initiatives. The initiative focuses on prevention of and reduction in waste by advocating less use of single-use plastics, better waste management, recycling, and raising awareness about sustainability. ‘Samudramanthan’ Recykal’s mission is to divert waste from landfills to recycle and reuse them. The company’s ‘Samudramanthan’ initiative, is inspired by Indian mythology in which the ocean was churned for nectar, aims to recycl ocean-bound plastics. The initiative targets gathering 70,000 metric tonnes of plastics from 207 districts in 19 Indian states. Profitable Venture Recykal is also associated with Rapidue Technologies Private Limited, incorporated on 26 November, 2015. It has a revenue of $93.2 million (as of 31 March, 2023) and a net profit of $3.21 million. In the pursuit of sustainability, Recykal continues to drive technological innovation, creating a lasting impact on waste management practices in India. Recykal’s efforts are albeit another drop in the ocean of sustainable ventures needed to save the earth, but it is a worthy one. SWATI DUBEY BW Disrupt 40 under 40 | WINNERS MANAGES WASTE Recykal is a tech startup that provides marketplace solutions for recycling waste ABHISHEK DESHPANDE Co-founder & COO Recykal