Mumbai: In an interview, Deepak Parekh, chairman of Housing Development Finance Corp. Ltd (HDFC), talks about the economy, markets, interest rates and the banking sector. Edited excerpts:
It’s been a challenging year. The last three-six months have been better, do you think the worst is generally over for Indian firms?
For India at least the worst is over. I see much positive growth, the gross domestic product (GDP) growth also will improve. We have had a little issue on the rains, a little bit of drought, so foodgrain prices going up is a bigger concern and you see the Consumer Price Index (CPI) is already way above in double digits. So getting 6.5% GDP growth this year despite having difficult quarters (in the) earlier part of (the) fiscal year is not an issue. I think we must look at the following year, 2010-2011, much more confidently than what we have gone through in the past.
When we sat down to analyse the firms which have done well, those that stood out were the domestic-focused firms... How much of it is because of these stimulus packages which have artificially created some demand for the moment?
I personally feel the stimulus has probably given liquidity...but (programmes) have not worked that aggressively or that well in India because the stimulus that we gave was not large in size, in quantity.
You show me an industry which is not doing well. If auto sales are 31% up, fast moving consumer goods and pharmaceutical firms are saying this is the best quarter we have had, where is the problem? The issues are over, are far behind it...concern is the credit growth in the first six months has only been 13% this year while deposit growth has been 20% in the banking sector...somehow we need to see that the credit growth by banks happens in a faster manner.
We didn’t find too many real estate firms in our top list of winners this time around. Do you think the worst is over for the sector or are you still uncertain?
I am still a little uncertain, I will tell you, on the real estate sector and I am convinced, I have gone around the country to big cities, and my view is that commercial real estate is very surplus today. I was in Hyderabad last week and I saw 4 million sq. ft of commercial real estate...completed and ready to move in, but no takers.
Unsold and untenanted. Similarly, the figure is slightly lower in Bangalore and Chennai, but even in Mumbai, in Pune, you find ready buildings with very few takers.
Do you think the markets are ahead of themselves?
The markets are ahead of themselves, the volatility in our markets has significantly increased... the increase in markets has been too fast and I don’t know whether it is sustainable.