Deepak Parekh, Chairman, HDFC Ltd., on Tuesday said that corporate India’s balance sheets are now much stronger than what they were in the pre-pandemic era. Capacity utilisation levels are nearing 75 per cent, and this is conducive for fresh investments.

The country needs large amount of long-term patient capital for the infrastructure sector. The country would need many more large engineering and construction companies.

“One hopes the lessons of overleveraging are not forgotten when India Inc gets back into expansion mode. I have always maintained that India grows when India builds,” Parekh said, addressing the annual session of the Indian Chamber of Commerce here on Tuesday. 

‘Towards $5 trillion’

India, he said, is well on its march towards meeting its much-aspired goal of being a $5 trillion economy in the next four-to-five years.

For this to happen, the country would need more savers. 

“The gap between deposit and credit growth has widened sharply, with year-on-year deposit growth lagging at 9 per cent. Long-term savers are needed for long-term investments,” he said. 

The government needs to have a mechanism in place to legally protect those involved in disinvestment transactions from its own vigilance agencies. This will go a long way towards speeding up the process of disinvestment and, more importantly, will help free up resources for the government to re-deploy in other sectors.

Power reforms

There is also a need to push through significant power reforms—lowering the threshold level for open access and opening up transmission and distribution. This will help pave the way for consumers to be able to choose their own utility providers and will aid in the faster shift towards renewables. 

“Key legislation for this is already on the table. Electricity being on the concurrent list makes reforms more difficult, but this government has the political capital to push through critical reforms,” he said. 

According to Parekh, stock market gyrations will continue. India has a liquid and efficient equity market, and many of the investments made in India were profitable. So when the funds needed money, they offloaded their investments in India. However, despite FPI selling in our markets, India’s stock market has been relatively better. 

“Year to date in dollar terms, the US stock market is down 22 per cent, China is down 33 per cent, and India is down just 10 per cent. With fewer options available, there is hope that emerging market funds will rebalance their weightages in favour of India,” he said.