Negativity around Indian economy had been exaggerated and not in line with its fundamentals, but the situation is returning to "rationality" now, M&M Chairman and Managing Director Anand Mahindra has said.
"There was too much negativity which was not in line with the fundamentals, and so now there's a return to rationality. There was a feeling of panic that was exaggerated and situation is moving back to equilibrium that leads to growth," Mahindra said in an interview in Singapore.
Allaying fears of India's balance of payment crisis he said: "We are not in a basket case situation. Even our foreign debt to GDP is not as high to warrant any kind of panic. In 1991, we had less than one month of exports foreign reserves. Now we are sitting on foreign reserves of over $280 billion."
Mahindra admitted that India witnessed some turbulence but said that it is moving back to the path of growth.
"It (India) is going to be power house of economy. It had some hiccups but situation today is one of moving back to equilibrium," he said, adding that "calm communication" has helped in returning to "rationality".
Stressing on the need to encourage manufacturing, he said: "About 50 per cent of India's population is under 25 (years of age)... Manufacturing ultimately creates biggest jobs. We thought we could leapfrog that era and move directly to digital era. That is not going to happen. We need to promote manufacturing and exports."
When asked if Mahindra group will hike prices to offset effects of the weak rupee, he said: "We are an integrated indigenous auto company in India. Our level of localisation is higher than any foreign company...when foreign car companies, which have higher level to import, have to raise prices..we may follow but that just improves our margins."
Mahindra said that weaker rupee has helped the company realise better margins. "We are not as global a corporation as we aspire to be still and ironically it is coming to our aid.
Weak rupee acts as an entry barrier for competition. Most of our business are growing."