Keki Mistry, Independent Director, says India really cannot let the pedal go off the growth criteria because growth will create jobs, jobs will create consumption and consumption will keep the economy growing. “So I do not think the pedal will go off for growth.”To begin with, given that the government has been very vigilant on the fiscal prudence path, do you think that that will only continue or that we can expect more populist measures, especially ahead of the elections this time?
Keki Mistry: I am very confident that the fiscal consolidation process will continue. The government has done outstandingly well on that front. Even during the peak Covid period, we did not go overboard. We did not just keep pumping liquidity into the system like some of the Western countries did and therefore we did not see the kind of tearaway inflation that they saw. Inflation did increase a little bit in India but that was more driven by oil prices and a few of the food items. So I think fiscal prudence will very much be there in the finance minister’s mind.

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Experts believe that capex growth rate might actually slow down. Do you think it is too early to take the pedal off on capex, given the volatile global environment?
Keki Mistry: No, I do not believe so. I would say there will be five focus areas of the budget, in my opinion, and again, in my opinion, growth will be one of the primary focus areas. India is the fastest growing emerging market in the world. It is the fastest growing large economy in the world, forget even the emerging markets. RBI has increased our growth target from 6.5% to 7%. And my personal view is that we may end up growing faster than 7%.

I think the focus will continue to be on growth. If you look at the rest of the emerging market pack in the world, the growth is expected to be about 4%. And if you look at the developed markets, the developed economies, the growth will be much lower. So because of this, India stands out. There are a number of foreign investors who are continuously looking at India.

In my opinion, we really cannot let the pedal go off the growth criteria because growth will create jobs, jobs will create consumption and consumption will keep the economy growing. So I do not think the pedal will go off for growth.

Reports suggest that the allocation towards affordable housing could potentially increase to 1 lakh crore. Is this a possibility according to you, do you think that the allocation needs to increase?
Keki Mistry: Yes, I believe so. One of the facts that we need to look at is employment generation. Employment generation in India is extremely critical. The government has done a fabulous job over the years in making sure that there are jobs constantly getting created, and I think that focus will continue and therefore the encouragement to sectors which create employment generation. One of the sectors which creates the most amount of employment is housing and therefore affordable housing. If you recall, about six or seven years ago, the government came out with this CLSS scheme, which had done exceptionally well. Not only did it lead to growth in the economy, it also led to a lot of people being able to afford to buy a house.

So, the allocation towards housing will increase. Not only will it help people, but more importantly, it will help the economy. Housing is a sector which creates a huge multiplier effect on the economy because there are so many sectors in the economy which depend on housing. Cement, steel, paint, power, housing creates so many jobs, not just directly but also indirectly in these sectors. So, yes, I believe that the allocation to affordable housing should increase.

What is your sense on the market borrowing? The street is expecting it to be about Rs 11.9 lakh crore, given the bond inclusion. Do you think the government would see enough interest there?
Keki Mistry: I would think so because at the end of the day, you have to match out your fiscal position. So, without getting into specific numbers on how much the government would borrow and so on and so forth, with the inclusion in the bond index, money will automatically come in. Therefore, the quantum of government borrowing, the exact quantum of what they will end up doing is something we will have to wait and see.

But in my opinion, the Budget will be well balanced. Fiscal prudence will be kept in mind. The inclusion in the bond index will bring liquidity into India, number one.

Number two, it will strengthen the foreign exchange position. We have now the fourth largest forex reserves in the world and my sense is with this further money coming in, that money, that should further get enhanced.

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