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HDFC Bank MD Aditya Puri predicts an uptick in GDP growth

BusinessToday.In     July 25, 2019

Two leading global institutions, the International Monetary Fund and the Asian Development Bank, may have cut India's growth forecast in the past week, but HDFC Bank's Managing Director Aditya Puri sees no cause for pessimism. In fact, he believes that the "doom" is over. "Do we need to be pessimistic that India's prospects are not bright in the medium to long term? I don't think so," he told The Economic Times adding that while an overnight turnaround is not possible, an "uptick every quarter" is on the cards.

On Tuesday, the IMF said that India's GDP will now grow respectively at the rate of 7 per cent in 2019, a downward revision of 0.3 per cent reflecting a weaker-than expected outlook for domestic demand. The ADB last week similarly lowered the growth forecast for this year over concerns about the shortfall in fiscal outturn in 2018. Last year, the global bodies had all predicted a growth rate of 7.5 per cent or higher for this fiscal.

"From 6 per cent [growth rate] we can only go upwards. What happens in the next quarter we don't know, but we will move up systematically depending on the efficiency of the execution to 7.5 per cent," said Puri. To accelerate beyond this level, private investment is needed. As per the latest depositories data, foreign portfolio investors (FPI) have been net sellers this month so far at over Rs 13,000 crore, the highest pullout since last October.

According to Puri, it is now imperative to bring money into the system, and a lot depends on government spending, disinvestment, infrastructure projects as well as the RBI. The Modi government hopes to garner Rs 1.05 lakh crore from disinvestments in the current fiscal, an increase of 31 per cent over the last year's target. Moving ahead with this plan, it has given in-principle approval for strategic disinvestments of 23 CPSEs including subsidiaries, units and joint ventures with majority stake sale of the government and transfer of the management control. If the macro indicators here on reflect an improving economy, FPI inflows can also be expected.

The government's proposed Rs 60,000-70,000 crore sovereign global bond issuance - the first such issuance - to partly finance its Rs 7 lakh crore borrowing is also expected to provide some relief to the domestic market, and Puri for one is sold on the idea. In Budget 2019 Finance Minister Nirmala Sitharaman announced that the government will start raising part of its gross borrowing programme from external markets in foreign currencies.

(Edited by Sushmita)

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