The quarter-three figures for this year have badly hit India’s hope for 7 per cent growth. In turn the government’s response could dangerously kick up the fiscal deficit and with elections just 70-days away, the future could be clouded with uncertainty. So what does this mean? What will GDP numbers for the year-end be?
Deepak Parekh, Chairman, HDFC Bank, Rahul Bajaj, Chairman, Bajaj Auto, Rajiv Kumar, Director & Chief Executive, ICRIER, Surjit Bhalla, Chairman, Oxus Investments, Prem Shankar Jha, Columnist & Author discuss the issue.
Here is a verbatim transcript of their exclusive interview on CNBC-TV18’s show War of Words anchored by Karan Thapar. Also see the accompanying video.
Q: The quarter-three GDP figures came in as a nasty surprise. Between October and December the economy only grew by 5.3 per cent, whilst manufacturing and agriculture actually shrank. In your eyes is this just one bad quarter or is it bad news altogether?Kumar: It was no a surprise for some of us because on December 3 we had forecast that the Indian economy would grow only at 6.4 per cent for 2008-09. We had anticipated growth for the latter half of the year would come in at about 5 per cent . What you are seeing is the beginning of a real downturn in the Indian economy. I would expect the fourth-quarter to actually be even lower at about 4 per cent .
So then your answer is, this is not just one bad quarter, this is bad news altogether?
Kumar: This is bad news, which is unfortunately likely to continue for about three-quarters at least.
Q: The Finance Minister Pranab Mukherjee insists that despite the depressing news from quarter-three, the economy for the year as a whole is still going to achieve 7per cent growth. Do you believe him or do you think he is simply putting on a brave face?
Parekh: I agree with Rajiv on the first point. It was not a surprise at all as Q3 was expected to be a disaster. In October-November business came to a standstill. Banks did not lend any money; banks did not borrow any money and the financial markets were closed for business.
But where I disagree with Rajiv is that I see much more buoyant numbers in January and February. I think the last quarter of our fiscal year, we will see a higher than 5.3 per cent growth and I agree with the government’s estimate that we will get towards the 7 per cent .
Q: So you think Pranab Mukherjee is substantially is correct, is that right?
Parekh: That’s right.