Q: Now that we are on a path of recovery, we find ourselves in a disruption where there is a disruption in global supply chain and there is volatility in commodity prices. In this background, what is your assessment of the FY2022-23? Ans:
>India has, over the years, resolved many of its structural challenges impacting macroeconomic performances
>External risks facing India are US Fed increasing interest rates and geo-political issues around the world
>External risks will impact commodity prices, oil markets etc
>Indian economy in a healthy position – demand growth expected, corporates ready to invest for capacity creation
>India looking at long-term growth at 6% to 8%
Q: While there is usually known question on India could register a better growth than other emerging markets. But even by RBI’s own admission, right now the bigger issue is inflation. How do you see inflation impacting business? Ans:
>Not all cost increases can be passed on to the consumers, as it impacts demand
>Corporates absorbing inflationary impact will have effect on margins
>Rising interest rates will also impact corporate bottom lines
>Corporates may shrink some of their margins because they cannot pass on all the inflationary impact to consumers
Q: Mr Sinha, it has been a long wait for private sector capex to come in. Especially during the pandemic, investment has mostly been driven by state and central governments. While there are some signs of a turnaround by private sector capex, by when do you think it is really going to pick up? Ans:
>Private sector capex picked up in infrastructure sector. Corporates raising capital from outside the country and working on capacity utilisation
>Power sector witnessing robust growth in demand
>Power sector in need of rapid capacity expansion to meet the demand growth
>Power sector needs more coal, as more than 70% of India’s power consumption is met from coal
>Demand is picking up in cement, real estate
Q: Hospitality, tourism, retail, cinemas – as you know these have been the worst hit during the three waves of pandemic. These are also the sectors that are struggling to go back to the pre-pandemic levels. Govt has taken some steps. Do you think that is enough? What more do you think can be done to revive these sectors? Ans:
>More than govt assistance, industries need the economy to pick up
>Although Covid-cases are picking up a little bit, it’s thankfully a milder version
>Economic activities should carry on. People are also going to carry on with their normal lives
>As people carry on with their lives, hospitality, tourism, retail sector will see huge pent-up demand
Q: The National Monetisation Pipeline and the National Infrastructure Pipeline – the two ambitious plans on which the govt is building revival program, a lot of these would be through public-private partnership. Previously the private sector has not had many good experiences with the PPP model. So, do you think there is a case for a complete overhaul of the PPP policy? And what are the assurances that the govt can extend to the private sector that the earlier incidents will not occur again? Ans:
>Power sector enjoys robust dispute resolution mechanism in relation to PPP and the govt is responsive to problems
>Govt needs to walk the fine line of getting people to commit to the contracts and also extending some leeway
>In a volatile economic environment, the govt needs to be more flexible
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