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India Inc fears the second wave of the covid pandemic could set back the gains made by the Indian economy in the last two quarters following the ending of the lockdown measures imposed last year.

“As a consumer and businessman, I am worried about what the economy would look like in a few years going forward, considering that the impact of first wave one was already in a negative way. But we will get to know by the end of May, because right now we are in a rising tide of what we have to handle," said Vijay Shekhar Sharma, founder and CEO of Paytm, speaking at the Mint India Investment Summit 2021, which kicked off on Wednesday.

Business leaders feel vaccination holds the key in the battle against covid and in deciding the course of economic recovery.

“June or July will tell us which way the tide is turning. The shortage of vaccination is creating a little bit of setback. Unless we have 50% of the population vaccinated we will not see a clear shift for the better," said Zarin Daruwala, cluster CEO-India and South Asia Markets, Standard Chartered Bank.

Businesses will be keenly watching what the government does next on the economic front, although it has to first bring the healthcare crisis under control.

“Government needs to come out with a strong policy and create a strong investment climate; otherwise it would be very difficult for many sectors to continue operating...Last time corporate India came in and did whatever was needed, but I think this year they would not have the wherewithal," said Praveer Sinha, CEO, Tata Power.

The government needs to explore ways to revive private investments in these uncertain times if it wants to mitigate the economic impact of the second wave, feel global investors.

“When there is uncertainty and volatility, investment is held back and that is what we are seeing and that is why despite all the positive steps that should have helped private investments to happen, private investments haven’t stepped up and that is really what we need to be thinking, about how we can bring in investments in these uncertain times," said Anita George, executive vice-president and deputy head of CDPQ Global, Canada’s second largest pension fund.

To be sure, while the second wave is a grave concern, corporate India remains optimistic that the measures taken by the government last year and the Union budget has put in place the building blocks needed to push growth. “What was good about the budget was that we decided to live with higher deficit and growth was recognized to be the need. India is still looking good. This can be a deterrent and, yes, we have to be well-prepared, but the service economy has been growing for India. In this pandemic, India has proved to be the best BCP (business continuity planning) site for services in the world," said Kaku Nakhate, president and country head-India at Bank of America.

Other measures enacted by the government such as increasing the FDI cap in insurance will also help the country attract long-term capital.

“Insurance firms and pension funds are long term investors and I expect capital to come into infra...We will see sustainable money flowing into other parts of the economy," said Ritu Arora, CEO and chief investment officer, Allianz Asia.

While covid may delay the recovery process by three-four months, India Inc. is optimistic that it won’t dent the long-term story of the country. “Growth is going to come. Last year when this happened the market crashed; but this time, it hasn’t; the rupee is stable, and yields, despite all the negatives, are still holding up. Banks will fund growth, liquidity is there," said Ashwani Bhatia, managing director at State Bank of India.

According to Ankur Gupta, managing partner-real estate at Brookfield Asset Management, sufficient amounts of private equity and venture capital money are available to fund the growth recovery. “Credit is available, but it’s not probably finding the right channel to reach. My hope is that with balance sheets being largely fixed and the consolidation happening in the banking sector, we will have all three avenues of capital available now," he said.

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