‘Govt Dis­ci­pline Gives Pvt Sec­tor Room to Bor­row’

The Economic Times - - Companies: Pursuit Of Profit -

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.

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