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India Inc’s recovery plans stay intact despite virus disruption

(Clockwise from top-left) Kaku Nakhate, president and country head-India, Bank of America; Ashwani Bhatia, MD, SBI; Zarin Daruwala, cluster CEO-India and South Asia, Standard Chartered Bank; Vijay Shekhar Sharma, founder, Paytm; Praveer Sinha, CEO, Tata Power; Anita George, executive V-P, CDPQ Global; and Ankur Gupta, managing partner-real estate, Brookfield.Premium
(Clockwise from top-left) Kaku Nakhate, president and country head-India, Bank of America; Ashwani Bhatia, MD, SBI; Zarin Daruwala, cluster CEO-India and South Asia, Standard Chartered Bank; Vijay Shekhar Sharma, founder, Paytm; Praveer Sinha, CEO, Tata Power; Anita George, executive V-P, CDPQ Global; and Ankur Gupta, managing partner-real estate, Brookfield.

Despite slow investments, firms are working with govt to return to pre-covid activity levels

Despite business disruption due to the second wave of the pandemic, India Inc. is prepared with a growth path for revival. Though investments slowed down last fiscal year, corporate India, alongside the government, is gradually building plans to return to pre-pandemic levels. India Inc. is ready to emerge from the crisis with reforms even as economic shocks appear to have extended to consumption and investment, according to the speakers at the Mint India Investment Summit 2021.

Investment is coming to India, which has been evident over the last few months. Pension fund investment in projects has boosted the economy. Foreign portfolio investments (FPIs), new structures, such as InvITs (infrastructure investment trusts) and banks, have continued to play their role in growing the investment pool for India. India is on its way to become the third-largest economy by 2031. We just need to build an infrastructure that services the world from here on," said Kaku Nakhate, president and country head-India, Bank of America. The government letting go of its clutch on higher deficit to be able to rein in growth is positive, she added.

Resilience of Indian corporations can be traced to the way banks raised capital last year to meet the liquidity crisis. While the Reserve Bank of India provided cushion to the limping economy by not only supplying enough liquidity in the system, it also lowered interest rates to historic lows and created an environment of secured investments. “Last year was tough for banks. But banks have managed to raise capital through different instruments like QIP (qualified institutional placements), preferential and AT1 bonds. The stance is towards growth. RBI provided liquidity and lowered rates. However, credit growth has been muted, but at the same time, the balance sheet of banks is in pretty good shape to a large extent. For banks like us, credit deposit ratio is low and are ready to fund the economy," said Ashwani Bhatia, managing director, State Bank of India.

Others concurred. Zarin Daruwala, cluster chief executive, India and South Asia, Standard Chartered Bank, said the emergency credit line guarantee scheme has worked well. “We will have to see for another two or three months and if we continue to see that kind of impact, then we would need another round of the ECLGS equivalent. The beauty of the scheme was that it did not dent the fiscal side of the government, but enabled the cash flow, being given in the hands of the borrowers, to meet expenses like wage or working cap needs," she added.

Some key themes that are likely to take corporate India out of the pandemic distress are making use of technology to pivot into new business and responsible investing. Vijay Shekhar Sharma, founder and chief executive, Paytm, said: “My intention is to use technology to enable disbursement of financial products or lending for that matter. Disbursement, I believe, will be technology-led, and banks, NBFCs, regulators and government should look up to partnering with fintech firms and double the number of people who have access to formal lending. Industry will grow and payment is a very fundamental need."

Praveer Sinha, CEO, Tata Power, also agreed that going forward some of the technological interventions will get more embedded in the system of the power sector. “We will find more people using these technologies (electric vehicles and renewable energy). When people use the new age technology in the mobility and renewable energy front, they also use other new technologies which were not being used earlier, so that on a real time basis you can monitor generation of electricity and control the usage of it. I think there is a huge convergence that is happening in electrical and information technology," he added.

According to Anita George, executive vice president and deputy head, CDPQ Global, Canada’s second largest pension fund, themes such as diversity, environmental, social and governance, climate change and inclusion are becoming core themes for investment. “When there is uncertainty and volatility, investment is held back and that is what we are seeing. Despite undertaking all the positive steps, private investments haven’t stepped up and that is what we need to be thinking about," George added.

Ankur Gupta, managing partner, real estate, Brookfield Asset Management, agreed that qualitative, responsible and inclusive growth is important. “India needs to shift from a consumer to producer economy. Credit is available, but it’s not probably finding the right channel. My hope is that with balance sheets being fixed and consolidation happening in banking, we will have all avenues of capital available now," he said.

nasrin.s@livemint.com

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