Zee Business Bureau Chief Mihir Bhatt caught up with HDFC Chairman Deepak Parekh on the latter's views on Indian Economy, Capital Markets, Reforms and way forward.
Excerpts from his interview.
There is a lot of of optimism in the country following the 2014 general elections results. Do you think the actions taken by the new government are promising so far?
It takes time for the reforms to be implemented. There are procedural changes, which need enough time. Government has taken a big step of diesel deregulation. All government biddings will be done online which will bring-in transparency. We need to understand that GST is good for the country. It is a big country, there are complex issues and it will take time for things to materialise.
What is your take on GDP of the country?
It is not possible for GDP to touch 9 percent in one year. Foreign investors have high expectations from India. Growth will inch up gradually.
What should be the government's priorities at this point?
Government has taken good initiatives so far. Campaigns like Digital India, Clean India, Make in India are good for the country. Make in India is a very important campaign. Manufacturing sector has been on a downward spiral due to number of approvals. PM knows very well how to make 'Make in India' a great success. He knows how to make it more customer-oriented.
Make in India campaign will help create jobs in the country. Gujarat is promptly giving land to set up industries and open universities. Approvals for housing should be eased.
At present, we need to have nearly 50 approvals to build a house which takes almost 2-3 years to get the final clearance. Slew of approval enhances corruption. Hence, there should be single window approval.
There is optimism in the market and it is termed as the 'Modi rally'. Do you think market is running ahead of time?
Too much money is chasing India. Foreigners are wanting to invest here. There is too much liquidity in the market and SEBI, NSE and BSE have made lot of improvements for easy buying of shares.
Expectations have build up for re-rating. Do you think re-rating is possible in this financial year?
Rating agencies would want to see what is the policy thrust. Maybe after Budget, India's rating may go a notch higher. I am confident that in 2015 we would be elevated a notch up.
There are high expectations that RBI may cut rates. Do you see Raghuram Rajan going ahead and cutting rates?
It is not possible to bring down inflation in 1-2 months. 25-50 basis points rate cut is possible. We need to see a sustained fall in inflation.
What are your growth expectations in the next 2 years. Can we be closer to 8%?
I am expecting 1 percent additional growth rate. Hoping for more than that is difficult. Investment decisions will take time to be implemented.
What does the government need to do to increase the pace of growth?
Government needs to work a lot on governance. Taxation is a big issue, both direct and indirect.
Service tax is also an issue. There are lot of disputes in transfer pricing. We need to improve taxation, transfer pricing. We need clarity on taxation. We need judicial, electoral and police reforms. State government must initiate judicial, electoral reforms.
Do you think government is at a point where it can choose which side of the fence to stand on? If the government does not cash in on the opportunities, it will be one of the biggest blunders. Your thoughts...
Take off has just begun. We are optimistic. We need to give the government a chance.