Montek Singh Ahluwalia's address at Business Today CFO Award Function (July 5, 2011)
July 15, 2011
Honourable Finance Minister Shri Pranab Mukherjee,
Let me first, I am sure, I am speaking on behalf of the finance minister also. My, rather, our warmest congratulations to all the winners of these awards. I must say that I was particularly pleased and I want to compliment both Business Today and also Yes Bank for instituting an award to honour CFOs. We have been to a lot of functions where people honour the best companies, honour the best CEOs but this one honours CFOs and I think it is correct that the role of a CFO in which finance has become very important and also in a world which finance has become very global and a world in which there is lot of uncertainties and there are new instruments to deal with change and uncertainty. (Watch video of Montek Singh Ahluwalia's speech)
The Chief Financial Officer is very different from the traditional conception of the guy who just kept track of the bottom-line. And therefore it is entirely appropriate that there has been this award instituted for Chief Financial Officers. I couldn't help noticing by the way that the winner in the PSU category. We still designate them director finance. I think I am going to request our colleague in charge of the public sector enterprises to re-designate the Chief Financial Officers in PSUs also as Chief Financial Officers. In fact in these days, it is very important that, you know, if there's no uncertainty, I don't think the role of Chief Financial Officers would be that important. It could simply be a matter of keeping the account straight. The moment you get uncertainty and the moment you get instruments to deal with uncertainty, the role of Chief Financial Officer as a financial strategist becomes very important.
Actually, one of the things we learned from the recent financial crisis is that the ways of handling uncertainties are really very complex. And lots of the traditional ways of handling uncertainties did not prove to be right. And there is lots of very detailed theoretic work, mathematical work on how you should handle uncertainty in a world in which there is risk and there is uncertainty and the two are actually quite different. So all of these suggest, we need a better understanding and we need to also celebrate the Chief Financial Officers who have succeeded.
So my warmest congratulations to all the award winners. Let me just make one very brief comment, I know, it's late and I don't want to hold you up very much. We had a very comprehensive account of the economy and its many challenges that in the address which the Finance Minister gave. When I came in, somebody casually asked me, "Do you see a blip in the economy?"
One of the advantages of being in the Planning Commission is that we take a long term view. Really in any five-year period, there are many blips in all economies and I frequently say to people that this is one occasion where we should not forget as we think of what look like blips. The world is not going through a period where other people don't have blips. Actually if we go around the world the blips in India are probably much smaller than the blips being experienced elsewhere. I mean, everywhere inflation has become a problem. Whether you look at Europe, or you look at the United States, the uncertainties on the fiscal side is a real worry and I think when you look at it from that point of view, and I say this as someone who were about to produce the approach to the 12th plan. We hope to put across a picture, that whatever you may think of the current week and the current month, I mean, I always have TV journalists sticking a mike in front and saying, "What you think of the latest increase in the WPI", or whatever it is in the last week.
It is good to think about what is the prospect of next five years look like. And I think that India is extremely well positioned for that five year period. Certainly, if you look at the rest of the world we are coping with exactly the same uncertainties that many other countries are coping with. Of course, we are being asked by the Planning Commission to explore the possibility of whether India can grow between 9 and 9.5 per year over the next five years. So I don't want to indicate exactly what we will come up with, coming to the NDC on that shortly.
But I feel that the kind of range is not at all impossible. The fact is that we will be ending the 11th Five-Year Plan this year. Given the range people have talked about, about growth rate, even if the growth rate is about 8.2 per cent and not, say 8.5 per cent, as was at one stage mentioned during the 11th plan period, we will still end the 11th plan period with an 8.2 per cent growth rate. So if we are ending a five-year period with 8.2 per cent, seems to me, if you forget about the little bits of blips and look at the next five years, we should be able to do better than that.
So somewhere between 9 and 9.5 per cent, that is really the task that has been set before us and I am not pre-judging what the conclusion will be, I don't think that the task is all that unreasonable. Having said that of course, I do want to say that nothing should be assumed to be automatic. It is actually quite difficult to do the many things necessary to get to 8.2 per cent and I think, it will be difficult to do many things that are necessary to get to 9 per cent or even better but we have been doing some of those things and five years is a reasonably long time period to be able to complete the rest of the agenda.
With those words, I hope that the many CFOs who haven't been awarded are working hard in their companies to make sure that companies deal with the uncertainties and come out of it lot stronger. Congratulations to all the winners,