Kamath Predicts Positive Quick Comeback For Indian Economy
The veteran Indian banker and former head of New Development Bank K.V. Kamath has said that we need to look at the prediction of global agencies with a caveat and not take it as a complete picture of what will happen to India’s economic future, post the lockdowns have started to open up. According to Kamath, the Indian economy will rebound faster. But global agencies like Standard and Poor’s (S&P) and International Monetary Fund (IMF) have not predicted so.
While the international agencies are using mathematical calculations to predict a not so quick recovery, according to Kamath, India’s economy can look at a ‘U’ shaped recovery with a ‘shallow and short base.’ The ex-CEO of ICICI Bank of a decade, Mr. Kamath added that, “My initial thoughts were this would be a U-shaped with a very long base.” He is sure that things will come around much quicker.
Giving a sector wise picture, he is most hopeful of the rural sector, which he stresses has shown remarkable turnaround. This has been more due to the fact that the number of cases of contraction has been seen more in the urban parts of India than in the rural side. He is also optimistic when it comes to electricity levels coming back to normal including sales of tractors and two wheelers. There is a growing demand of electronics and short term items, especially in the rural sector.
Large industries, too, he said may come back very rapidly as top Indian companies have never been as deleveraged as they are today. He is though doubtful about the recovery in the construction, entertainment and retail space that has been severely affected due to the social distancing protocols to be met. He felt these industries would need support from the government to remain afloat, till the time a vaccine could be put into the market and people start feeling safer to move out. The International Monetary Fund had pitched India’s GDP to contract 4.5 percent this fiscal. Most rating agencies too foresee a sharp contraction.