‘Worst is behind’ for India with economy returning to growth, says veteran banker

India’s gross domestic product (GDP) will be in positive territory in the fourth quarter of this year as demand picks up across all sectors of the economy, says veteran banker Deepak Parekh.

“Based on a series of high-frequency data, there is a distinct trend of sequential month-on-month improvement. There is a lot of catch-up required, but suffice it to say that the worst is behind us,” he said at a virtual conference organized by the Canada-India Business Council. 

According to Parekh, toll collections in the country are back to 88 percent of pre-Covid-19 levels, e-way bills are increasing, and electricity consumption has stabilized. 

Parekh, the non-executive chairman of mortgage lender HDFC, said residential housing sales for this quarter have gone up by 34 percent as people are buying ready-to-move-in apartments. 

Agriculture has also been looking very promising, with the country expected to have record food grain production of 300 million tons this year, he added. 

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Talking about GDP growth outlook, Parekh said, as quoted by the Economic Times, that “for the first quarter, we had contraction of 24 percent, but I am not too worried about that because India was in complete lockdown for most part of the quarter.” 

He added: “For this quarter, which ended in September, we are expecting -5 percent, and in the last quarter, we will be in positive territory. So, I remain reasonably optimistic about India’s potential.” 

The banker explained that India is a domestic consumption-based economy and demand is set to rise in the coming months. “We are consuming what we are producing, so demand has to increase. … I am very optimistic about India’s story in the short to medium term.” 

He also noted that, despite the shrinking economy, Indian companies have raised $31 billion in the past couple of months, indicating there is enough liquidity in the market.

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