ET Now: Talking about the expectations from Narendra Modi, don’t you think that a lot of expectations and money are basically behind one man? Despite his good intentions, there are structural problems The economy and even the prime minister don’t have enough of a magic wand?
KV Kamat: If you look back 10 years, the economy has almost doubled in size despite all the structural problems. Now you have a leader who has a known penchant for fixing things and making sure things work. It’s the same set of structures, the same set of people driving it. You have the right leader who can lead the effort.
ET Now: We met Mr. Birla the other day with the finance minister and when he left the meeting, he said that he expects the economy to revive in three to six months. He says that now he is starting to invest in India. We don’t hear that from many corporate leaders. You have the pulse of corporate India’s mood. When do you think corporate leaders will start investing?
KV Kamat: The first impression comes from the market. It is the collective wisdom of the market that the action is there and we will move with speed. This improves the confidence level of the industry. Now we have to see if some of the ground conditions necessary for people to return to investment mode will change. Today I read that the reforms or the projects that are stuck, will find a solution in the next few days. If that happens, you will see a sea change in the investment mindset, as it were.
ET Now: It could happen within three months itself. Is this what you think?
KV Kamat: I think in three to six months it can happen. But we want to invest more. The first six months are enough for the rest of the projects and so on.
ET Now: One cue that corporate India will be keeping an eye on is the budget. Given the nature of the power that we have, the power that this government has in Parliament, do you yourself expect drastic reforms in this budget?
KV Kamat: I don’t want to call or second guess what someone is working on. But I think it would be a budget where you try to have financial discipline and whatever it takes to achieve that discipline. Now in what amount, in what combination, is the request of the government. I think one thing people will look for in the budget is fiscal discipline and a way to control the deficit, say, in three years. If it’s well-crafted and well-articulated, you’ll see happiness rise.
ET Now: Does the 4.1% figure sound a bit daunting to you?
KV Kamat: If you eliminate waste, you eliminate what is stolen and eliminate what is not needed, 4.1 is achievable.
ET Now: When do you think Mali and Will monetary policy work together? When do you expect prices to change?
KV Kamat: On monetary policy, we always say let’s look at a constructive fiscal deficit plan. We know what it is and where it will end. Once they see that structure as it has been for this year and, say, for two years down the line, then I have to believe that they have to have more confidence in the rate hikes, or inflation starts to come down on its own. We see that many people have offered many solutions starting with releasing food stocks, pushing the pedal on APMC reforms, etc. I am again sure that this is something that the government will soon realize and take all the steps or some steps that will give the policy makers the confidence to lower the interest rates. We should see that happen in the next 12 months this fiscal. I think it should start in the first six months.
ET Now: A quarter of a year or more?
KV Kamat: I have no say in this. Let’s see what happens. It will all depend on where the deficit number falls and whether you are able to keep up with the rate of inflation. If it turns positive, prices can move faster.
ET Now: What is your view on growth in the short, medium and long term?
KV Kamat: My long-term number does not contain a single digit. This is a double digit. So you can guess about it.
ET Now: During this government?
KV Kamat: I think this will happen during the tenure of this government.
ET Now: The first term itself?
KV Kamat: This will happen in the first term of this government. This is for sure. If they progress in the way they want, I am sure we will see a double rate in the first term of this government itself.
