Economy: India entering “most difficult” situation, says HUL chief

Virendra Pandit

New Delhi: With the long-term impact of Covid-19 and the Russian-Ukrainian war unfolding across the world, including the West, a corporate leader has warned that India is also entering a “most difficult economic situation”.

At the shareholders’ annual general meeting (AGM) on Thursday, Hindustan Unilever Ltd (HUL) Chairman Nitin Paranjpe described the current macroeconomic situation as “probably the most difficult economic situation.” India will require some astute handling and a balancing act to ensure growth remains on track and inflation is contained, as the immediate future is challenging.

Global supply chain disruptions because of the pandemic and geopolitical tensions have impacted India as well, he said.

“We are going through probably the most difficult economic situation. Inflation is high, and there are supply chain disruptions, “, he said.

It is because of a combination of factors. While we were just coming out of the pandemic, which disrupted many supply chains, we also face geopolitical tension in many parts of the world, Paranjape said.

“Therefore, in India, we have now seen 14 consecutive months of double-digit wholesale price inflation. I don’t know when we have last seen something like that,” he wondered.

Asserting that this has influenced the Indian market, the HUL chief said, “FMCG markets, which have been strong for long, have seen this effect and, more recently, we have seen market growth rates moderate and our volume growth rates have actually become negative in the short term.”

“Many people were complimenting India on how we were coming out of the Covid period. But the immediate feature is challenging, and it will require some astute handling and a balancing act to make sure that growth does not stall and we can contain inflation.”

However, he said, “I remain confident that as a country, we will navigate through this crisis. The World Bank said India will remain the fastest-growing economy in the coming years. That makes us look forward with optimism even though the short term is very challenging.”

He cited low per capita consumption, a large young population, a growing middle class, rising affluence, and adoption of digital technology as reasons for HUL’s bullishness for the FMCG sector.

Paranjape said HUL undertakes the price hikes in a calibrated manner. “There are price point packs that we have to be watchful about and we will follow the strategies, sometimes balancing reducing volumes of fill levels, sometimes taking up prices.”