‘Govt Discipline Gives Pvt Sector Room to Borrow’
Rashesh Shah, chairman, Edelweiss, says he is happy to see the government chose not be disruptive in the Budget. In an interview with Shilpy Sinha, Shah talks about his acquisition plans, and reiterates that the fair value of the rupee should be 72-73 against the US dollar to be competitive. Edited excerpts
What is the takeaway from this year’s Budget? This government has been fiscally prudent despite the upcoming elections. They have been saying that fiscally we will not be irresponsible. There is a strong correlation between a low fiscal deficit and the boom in NBFCs. After 2012, when the fiscal deficit came down, the balance sheets of all NBFCs had improved. The government’s discipline gives a lot of room for the private sector to borrow. If you look at 2009-11, the interest rate was not high, but government borrowing was very high.
The second point is, if you look at the last budget and this Budget you will see the government has not been tinkering much. For them, consistency is very important. They have not announced any new programmes. The annual budget can be very disruptive if you tinker with it every year. Third, they are spending on expanding capital expenditure. Roads, ports, renewable energy have done well. Power projects are seeing revival as they have cleared coal. Every EPC company is doing well. The economy does well when consumption grows.
Do you expect private investment to pick-up soon? Private capital expenditure is not happening because their average utilisation is 7075%. Some industries are working at 45% capacity. Some like steel and cement at 60-70%. I don’t see private capex coming back in another one year. Global demand is also weak. Moreover, high global capacity will put pressure on Indian companies.