Demonetisation hasn't affected strategy of CEOs: Karan Singh, managing director, Bain & Company

With less than a week to go for the finance minister to present the union budget, Karan Singh, managing director at consultancy firm Bain & Company spoke to TOI's Surojit Gupta & Sidhartha on why he is bullish about India's growth prospects and why he thinks demonetisation is a near-term dislocation which has not affected the medium to longer term strategies of CEOs.

Which are the sectors that have been affected by demonetisation?
Most sectors have been affected due to the liquidity crunch. Even the most essential services like healthcare got hit.Besides, real estate and cash sensitive segments were also affected.

The impact varies depending on the geography, sector and value chain. However, many sectors are improving such as FMCG and agriculture. Importantly, what we are not hearing CEOs say is that this move has affected their long-term strategy and their commitment to the market.

This is a near-term dislocation that they have to work through and it doesn't change the way they look at the market. Many CEOs are appreciative of this move especially in conjunction with impending GST, as the economy will start to get more formalised and transparent.

What are your views on the current state of the economy?
The government's approach should be to accelerate reforms. What's required is to stay the course, push forward bolder reforms, and focus on rejuvenating consumption and private investment.

We must also sure that we are not compromising on the fiscal consolidation commitment which gives us credibility.We need to also commit to prioritising and making bigger investments focused on social development ­ health and education.

Can you elaborate on economic impact of uncertainty in India and the world ­ given Brexit and Trump's election?
Let's step back to see where we are globally.

We see pockets of growth, whereas a few years back we were facing mostly sluggish growth.There are many parts of the world where growth is structurally challenged, in UK with Brexit, in EU and with China's structural decline.

There, however, are pockets of opportunity to consider. In the US, we might see an upside if we get the fiscal stimulus in terms of tax rates and infra spending. If you look at the emerging markets, several are vulnerable to the export and commodity mar kets.

What makes select emerging mar kets attractive (like India, Philippines, Vietnam and Indonesia) is a combination of a sizable domestic market, manageable debt situation and commitment to reforms ­ and that's where India has a great opportunity.

India has a large local market, is contin uing to move ahead on reforms and the macroeconomic situation has improved relative to the past and relative to other emerging markets.

There is, however, uncertainty coming from political changes in the US, from globalisation headwinds, and from the potential strengthening of the US dollar. This uncertainty is where the opportunity lies ­ if India can stay steadfast and push through reforms and provide a stable environment, MNCs will invest.

India has the tailwinds and bold leadership to offer great opportunity in an uncertain world. This is where the real test also lies ­ of not getting veered off course due to populist policies especially as we approach the elections.

How do you look at the digitisation push and opportunities in fin-tech?
Disruptive. Digitisation will affect most and transform many sectors. The ones at the forefront are financial services, retail and telecom. Customer engagement via digital will be the game changer.Digital in India is at an inflection point.What's going to keep companies ahead are analytics and big data that enable decision making.
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