- 7/22/2024
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00:00All right breaking news and you're seeing this at the bottom of your screen the latest updates from the
00:06economic survey and the countdown to union budget
00:092024 begins in earnest
00:12Because this is the document that will set the context for the presentation of this very important document by Modi
00:193.0 this remember is going to be the budget that sets the roadmap for growth
00:26Heading into the next five years at the very least, of course
00:29It's going to talk about growth much further into the future as well
00:32Very importantly and Pallavi Nahata is joining me on this conversation
00:37Very importantly this document the economic survey is talking about the growth
00:43Projections and the outlook for the new financial year it takes into account several disruptions on the global
00:50Stage with regard to geopolitics and it has given a projection of economic growth GDP growth of
00:586.5 to 7 percent. I'm reading straight from the document where it's saying that considering various factors the survey
01:06Conservatively projects a real GDP growth of six point five to seven percent with risks evenly balanced
01:14Cognizant of the fact that the market expectations are on the higher side
01:19This is an important statement to make Pallavi and of course
01:23There's a lot more in the economic data and economic survey that we will go through
01:28But the first and the most important point a lower than RBI projection for GDP
01:35That's right. So the RBI does project GDP growth at about 7% or thereabout
01:41And the government instead the CEA in the economic survey has chosen to give a range
01:48Oh, that's between six and a half to seven percent, you know market expectations
01:53Also remain closer to the RBI's estimate and there is a fair chance Alex that over the next few quarters
02:01especially given the resilience that we have seen in the Indian economy and the fact that GDP growth has almost
02:09Consistently in recent quarters surprised on the upside
02:13Given the range by the government
02:15We will see GDP growth closer to the seven percent mark rather than the six and a half percent mark
02:22but of course the economic survey does talk about the number of factors at play and how
02:28Volatile some of these factors currently are
02:31And as such it is possibly a mark of caution
02:35That the CEA has chosen to give a range for now
02:39It was those are the words that it uses it says it's cautious about its projection
02:44That's speaking about what the IMF is projecting on the global stage
02:49The global economy is set to grow 3.2 percent in 2024
02:53The average annual global growth rate was 3.7 percent during the decade ending FY 20
03:00That is a financial year ending 20 now
03:02It's talked about several aspects in the global stage, but on the downside
03:05It's saying that any escalation of geopolitical conflicts in
03:102024 could in fact lead to supply dislocations and higher commodity prices
03:15This is something that the RBI has pointed to in several occasions when it is
03:20When it is chosen caution and pragmatism and said that it is not yet ready to consider
03:26Easing of monetary policy it is also saying that this could in fact the economic survey is saying that this could influence
03:33The RBI's monetary policy stance the global trade outlook for 2024
03:38According to the survey remains positive which merchandise trade expected to pick up after registering a contraction in volumes. It also speaks
03:46Pallavi about the
03:48Monsoon and the fact that it is still a little cautious
03:52Despite the projection for a normal monsoon because ultimately what matters is the spatial distribution, right?
03:58Yes, we have seen the monsoons remain fairly volatile
04:01June started off on a bit of a week week wicket
04:04But we have seen the monsoons gain momentum in July and that perhaps
04:10Explains the caution being exercised in that front as well
04:14while the deficit that we had seen in June has been made up for by
04:19Excessive rainfall in several parts of the country in July
04:23Oh, we're still to see what August and September look like, but interestingly, it's you know, especially given the agricultural implications
04:31It's July
04:32Which is a key determinant of what?
04:35The output for the year is going to be like because that's when the curry sowing takes place
04:40But Alex I'd also like to quickly draw attention
04:43to
04:44You know the economic survey addressing these statistical system now the reason this is you know of interest to me at least
04:52It's because of the fact that we have had
04:55multiple controversies in recent years
04:59Regarding the must be and you know around the GDP IIP
05:05Inflation but of course more than other indicators the GDP or the lack of the census
05:11We're running late on that as well. And that has had implications on the accuracy of
05:17Government data. So the government has actually
05:22Taken the bull by the horn so as to say and addressed some of those
05:27concerns around India's statistical system
05:30It has also outlined steps that are continuously being taken by the government to strengthen the statistical base
05:38So that's definitely something that is
05:41Something we're going to be watching out for in the coming months
05:46We are expecting a rebasing in the CPI as well a lot of concerns around the GDP
05:53And these are all works in progress like the government has said it is looking into addressing a lot of these concerns and challenges
06:00Yeah, so it's it's interesting
06:02that's certainly something to watch for a more immediate thing that you would want to look at is why the
06:09Economic survey has been a little cautious with regard to its projection on GDP where it said six six point five to seven percent
06:17That's a pretty broad range if you think about it
06:19It says that domestic growth drivers have broadly supported economic growth in
06:25FY24 that is the previous financial year despite uncertain global economic performance
06:30It is said that improved balance sheets will help the private sector cater to strong investment demand
06:36But it's saying that there is a note of caution that is warranted here
06:40It says that private capital formation after good growth in the last three years
06:45May turn slightly more cautious because of fears of cheaper imports from countries that have excess capacity
06:53But then sub novice chief economist at Bank of Baroda is joining in mother and thanks so much for taking the time
06:58And of course, we would have to give you a little time to go through the the nitty-gritties of the document the fine print
07:05But what stood out to me right off the bat is the fact that the economic survey has been a little cautious in its projection
07:13For GDP growth in the current financial year. It's provided it in a range of six point five to seven percent with risks evenly balanced
07:21What do you make of that?
07:24No, I think Alex it's a bit too conservative because we at Bank of Baroda looking at seven point three seven point four percent
07:30with possibly an upside
07:32because I think the major problems which we had last year in terms of low growth and consumption and
07:38Investment is something which we think will turn around in the current financial year. So I think what the government is doing out here is
07:46Taking a very conservative view of taking six and a half to seven percent as the real GDP growth rate
07:52But I think Alex what's really important about this particular number because I think this is just a forecast and things are going to change
07:57within the course of the year
07:59This may give us an idea that this particular number is going to go in when we're talking of the budget formulation tomorrow
08:05So tomorrow when you're looking in terms of the growth in nominal GDP, I think in during interim budget
08:11They spoke of ten and a half percent
08:12So if we're really talking of six and a half to seven percent real GDP
08:16It looks like that that ten and a half percent may not really change
08:19So I think that is a kind of an implication I would derive from this conservative estimate
08:26One other aspect to pay attention to Madan is that in the past years
08:32We've and they refer to private capital formation here and they refer to private Capex
08:38We've seen this government spent quite robustly where required and pushing infrastructure pushing defense
08:46There's quite a lot that is set aside in the budget for these aspects
08:50And so therefore quite a bit of the growth is also driven by public spending
08:54Would another interpretation be that the government is going to be a little cautious when it comes to spending?
09:00Is that something that you can derive?
09:02See, it's definitely something which cannot be ruled out because if I am saying that
09:07The nominal GDP growth is going to remain virtually where it was
09:10When the interim budget was presented
09:13It may follow logically that we may not have too much of change in the CapEx of 11.1 lakh crores
09:18Which the government has projected so I think that will naturally flow from it
09:22And it's also if I have to actually extrapolate it further
09:25I would say the one lakh crores of bounty which you got from the RBI
09:29surplus transfers may probably be used more for containing the
09:34Fiscal deficit and maybe spend a little bit more on revenue expenditure where it's required based on the election
09:41Commitments, which are made rather than focus more on CapEx, which may also not be feasible given the fact that
09:47Four months of the year would have been passed by the time this budget gets
09:51Implemented so we may not have that much of capacity to implement more projects beyond the 11.1 lakh crores
09:58All right, Mr. Sabnawaz
10:00Thank you for taking time and joining us. This is Pallavi joining in so
10:05On the economy the economic survey continues to remain fairly optimistic
10:11Despite the cautious note that the government appears to be striking in terms of the GDP projection
10:17But all in all the commentary on inflation or on external metrics
10:23Or the way forward in terms of fiscal consolidation
10:27Appears to strike an optimistic note. What are you making of the commentary on the economy?
10:34So I think one thing which we also believe is that the economy is going to perform
10:39Very well in the current financial year and even though we are talking of a number less than 8.2 percent
10:46I think it's the base effect which is coming into into picture
10:48Which is keeping the number at the 7.3, 7.4
10:51Which we at Bank of India are saying or maybe what the RBI is saying 7.2 or the government 6.5 or 7%
10:57But I think for what you mentioned about what the economic survey talks about the different sectors in the economy
11:02Especially when you're talking of things like inflation or you're talking in terms of exports
11:06I think there's reason to believe that there will be more broad-based kind of growth, which we'll be seeing this year
11:12And hopefully the kind of challenges which we had last year in terms of consumption being affected by higher inflation
11:19Will probably not be there and there could be some kind of a pickup in private sector investment
11:24Because I think the moment we see consumption picking up there's a case of saying that capacity utilization also improves
11:29Which will also finally lead to higher investment from the private sector so far
11:34We have seen private sector investing more in infrastructure oriented sectors. This needs to become a bit more broad-based
11:41We can take heart from the commentary provided by the economic survey
11:45But if things are going to improve in a more generalized manner, then I think even private sector investment could be looking upwards
11:51All right, and coming back to inflation the government does say
11:56That in order to have a more accurate data set and be able to take adequate
12:02Supply-side interventions to rein in inflation high-frequency price monitoring data for essential food items
12:09Collected by different departments may be linked in a way that the build-up of prices at each stage
12:15From the farm to the final consumer is quantifiable and monitorable
12:20The survey also goes on to say that the ongoing efforts to construct the producer price index for goods and services may be
12:26Expedited to have a greater grasp of episodes of cost push inflation
12:31further given the results of the household consumption expenditure survey
12:35For 2022-2023 that were released not too long back
12:39It may be appropriate to expeditiously revise the consumer price index with fresh weights and item baskets
12:46So clearly these are concerns that economists have been voicing for a while and the government seems to have taken note
12:53And appears to be working on a lot of these
12:56New sort of interventions in existing databases and rebasing the some of the existing databases
13:04No, I think this is something which is long overdue because we are dealing with base years of 11-12
13:09Starting from your GDP to WPI, IAP and the CPI
13:13So there's a need for one to actually change the base years because you know
13:17What really happens is that any index is based on a particular basket of goods
13:22Which are relevant at a certain point of time. Now since 2011-2012
13:26I think things have changed dramatically in the economy if you look at the overall consumption power
13:31consumption
13:33Tendencies as well as the production
13:37Rates which we have seen I think there's been a kind of major transformation which has taken place
13:41Especially given the fact that I think we are now more in the digital mode something which was not there in 2011-12
13:47So there's evidently need for one to revisit these particular indices, but I think the major problem here
13:52I think we should not be in a hurry to do it is about the choice of the base year because
13:56of the fact that we've had the pandemic and since
13:592020-21 I think there's a lot of disturbances which are being caused
14:03And every time we end up saying because of the pandemic low base effect things are looking so much better today
14:08Or they're not looking at that as well as what they looked in
14:122018-19. So I think the choice of the base year would be very very critical
14:16So I think there needs to be a lot of work done on choosing the right
14:20Base year because I've been hearing that they've been talking of 22-23 being the ideal base
14:24But even here we have seen that the full recovery from the pandemic has not taken place
14:29So if I choose something like 22-23, I may again be giving a different kind of
14:33signals to the market. If I choose 2018-19, which to my mind is probably the right kind of base
14:39It may still sound a bit outdated considering we are in 24-25 right now
14:43So I think this is something which has to be done in a very calibrated and cautious manner
14:47so that we shouldn't be fighting over saying whether the choice of the base year is appropriate or not because
14:53Practically speaking it's going to last for another five six years. So we need to make sure that the base selected
14:59Is the appropriate one for all of them
15:02In fact, I think we should have the same base year for all the parameters
15:06Which we're talking about starting from GDP to CPI and I think the PPI which you mentioned off
15:10I think this is also something which is long overdue
15:12Because while we do have the WPI which comes close to a producer's price index, but we should remember that it does not include
15:19services, it has only manufacturing and farm products, so
15:23Strengthening it and bringing about a PPI which is based on the WPI
15:28Will also be very useful as far as the government is concerned in terms of monitoring price movement in the country
15:34All right
15:35Interesting points that you're making Madan. We're also joined by D.K. Joshi, Chief Economist at Crystal
15:42D.K. Thanks so much for taking the time and
15:45Hopefully you've had a cursory glance at a few of the aspects here
15:48I'm curious about what you make about the projection that this the chief economist
15:54Chief economic advisor makes in the in the survey for GDP growth real GDP growth in the current financial year
16:01It's a range that has been provided of 6.5 to 7 percent, which is lower than what several
16:09Private forecasters are making
16:11Perhaps lower than what you're projecting as well for the current financial year and what the RBI is projecting which is at 7 percent
16:17What do you make of that?
16:19Well, I think it's a it's a fairly balanced projection
16:23I would say I think if you look around I think there's so many risks globally lurking around
16:28and also, I think the interest rate hikes that
16:33The that were initiated earlier and the rates are still high
16:36Their impact will be felt on the economy particularly on the urban part
16:41And I think the services pent-up demand is also
16:44Also reducing so the some amount of moderation is in growth is expected and our own forecast is 6.8 percent
16:51which is precisely between
16:53midpoint of 6.5 to 7. So we I think it's fairly in line with what we expect and
17:00And I think
17:02We'll get more clarity on this once I think the monsoon season is over and we know
17:07How the agriculture performs because agriculture hasn't done
17:11That well last year, so there will be a very strong base effect
17:14I think if monsoons play out
17:16well
17:16I think you will see a very strong growth in above normal growth in agriculture and that I think can
17:22can create an upside but I would completely agree with the
17:25with the with the broad range that has been provided 6.5 to 7 even with this I think India will continue to be the
17:32fastest growing large economy and
17:35And
17:37So I I'm I'm in no conflict with this this number
17:40I'm looking at one of the charts that talks about steadily declining deficit ratios decay as well
17:47And in that we're talking about fy24 projected at 5.6 percent for fiscal deficit
17:542.6 percent for revenue deficit and the primary deficit at two percent
17:58that fiscal deficit number is going to be watched very closely when the finance minister presents the budget for tomorrow because
18:04based on
18:06What we've seen in terms of the revenue collections as well as what was received from the reserve bank of India as a surplus
18:13There is an expectation that this could be revised downwards
18:16Are you are you expecting that as well? And what in your estimation or your expectation will be the projection for fy25?
18:24Well, I think they will signal a lower
18:27Deficit than in the in the in the interim budget, maybe I think at around five percent
18:32Because I think they have got a windfall
18:35From from from the rbi transfer, which was quite generous
18:39More than what was expected earlier
18:41So they will use it for for supporting some of the trailing parts of the economy
18:46and a small part of it will also be used to reduce the the the deficit from the from the
18:53From the from what they had assumed or what they had forecast in the interim budget
18:57So it will actually be distributed between between both I think more fiscal consolidation
19:03And more support to the economy. I think the focus will be more on the providing support to the economy
19:08All right, uh, mr
19:09Joshi, the the eco survey does also talk about key areas of policy focus in the short to medium term
19:18and one of the first sort of
19:21Uh
19:23Highlights here is the government's need to continue to generate productive employment
19:29To create many jobs. There is need to create the conditions for faster growth of productive jobs outside of agriculture
19:37Especially in organized manufacturing and services even while improving productivity in agriculture. So that's one of the key
19:45Focus areas for policy in the short to medium term says the eco survey
19:50It also talks about the skill gap challenge
19:54And goes on to talk about the necessity to tap the full potential of the agriculture sector
20:00As well as easing the compliant compliance requirements and financing bottlenecks
20:05confronting msmes
20:07And of course managing india's green transition
20:10So clearly the eco survey does sort of appear to lay out what the policy
20:15areas for the government might be in the short to medium term and these
20:19Appear to be broadly in sync with the requirements of the economy at this stage
20:25what are your thoughts on what the government is highlighting or sort of
20:30Trying to highlight in the economic survey
20:33Now these are perfectly aligned to what needs to be done I think we I completely agree with the with the
20:40with the statement that we need to create more productive employment in the organized part of the
20:45part of the economy and I think for that we'll need to promote manufacturing sector and particularly the trailing parts of
20:54Are also uh labor intensive like uh textiles
20:59Uh leather
21:00Gems and jewelry these have I think not done that well in the last couple of years
21:04I think so they made there is need to promote
21:08These segments the second is I think
21:10There are sectors where there is a skill mismatch. I think for instance your infrastructure is growing at a fast pace
21:16but the the
21:17You require certain skilled people for for creating infrastructure
21:21Particularly new infrastructure that has been built and there is a shortage of those people
21:27uh, and then I think
21:29you also need to prepare apart from this from an employment perspective is that the there is a very swift movement in the AI domain and
21:36I think it's uh, the the AI is able to do many of the things which
21:42Humans can do so there could be some
21:45Disturbance in the job market because of that. So I think how do you prepare people for that?
21:50So I think there is need for skilling reskilling and also I think the vocational training
21:55uh requirement where there is a need and you don't have enough people and on the other hand you have an
22:01Unemployable army of people who are simple graduates who can't be plugged into the job market
22:05So I think I completely agree with the employment productive employment
22:10aspect both from the demand from the point of view of
22:13Of reducing the skill gap and also from the point of view of reskilling for the new requirements of the economy
22:21And then I think climate issue is of course important
22:23I mean, we all know what the the one of the reasons why food inflation is so high is because the climate shocks have
22:30Intensified whether it is heat waves or it is the changing patterns of monsoons or unseasonal rains
22:36I think all those things require more adaptation measures
22:40Uh, so I would I I'm completely in sync with that and then for the small and medium enterprises
22:46Which are obviously more labor intensive. I think they need to be facilitated more with with more support from the credit side
22:53I think they also need a more more supportive
22:56Uh enabling environment, I think from from the point of view of of input costs, etc
23:01Which which I'm talking of elixir charges and so on which are which are higher in india
23:06then I think uh, and then our competitors, I think if you want the the
23:11Medium and small enterprises to succeed. I think it goes beyond just provision of credit
23:16So I think broadly I think these are all good points. And finally, I think
23:21Uh, uh the reform part, I mean which is which which is about uh, reducing the choke points or bottlenecks in the economy, which
23:30Uh, which pay off with a lag? I think if you start them today, you will see the benefits after two three years
23:35So there is need to front load and and finally, I think this budget is uh is is going to be effective only
23:43For seven eight months because I think uh, one third of the year is uh, fiscal year is already over
23:49I mean that there's not much to influence in this in this fiscal year
23:52So you need to front load all the efforts that you announce in the budget
23:57Fair point, uh, just a quick point on state government finances and i'm referring to point number one point three five gentlemen
24:04In the economic survey survey if you if you would like to look at that, I will read it out
24:09It talks about the fact that state governments have continued to improve their finances in the previous financial year
24:16And the preliminary unaudited estimates of finances for
24:1923 states and this includes the large ones the likes of uttar pradesh as well as maharashtra and various others including kerala madhya pradesh
24:28Published by the comptroller and auditor general of india suggests that the gross fiscal deficit
24:32It was 8.6 percent lower than the budgeted figure of 9.1 lakh crore rupees
24:38And that implies that fiscal deficit as a percent of gdp for these states came in at 2.8 percent
24:44As against a budgeted 3.1 percent, which is lower
24:47So therefore this leads in not just to a lower glide path for
24:52India at the at the central level, but india at the central level plus states. What do you make of that madan?
25:01Yeah, I think what we have seen in the past is that the states tend to be very much disciplined
25:06That's thanks to the frbm
25:07Since you have the frbm norms and you're not allowed to exceed a number of three percent
25:12some states, of course can go up to 3.25 3.5 based on the kind of
25:17Equivalent reforms which they bring into the system. So they have always tended to be very conservative in terms of the spending
25:23So I think one downside of it something I think which we need to look into the data is that very often
25:28in case the revenues do not increase to the kind of
25:32Levels which were expected these states normally tend to cut back on capital expenditure
25:38So but at the end of the day in terms of pure fiscal prudence, I think we have probably in the right direction
25:43And states have been playing their parts
25:46So now it's there for the center to make sure that it moves towards a four and a half percent
25:51Next year. So that's why we also believe that they will probably be talking a number closer to five percent for
25:56this financial year
25:58but I think the issue of states is something which needs a bit of
26:01Rethinking because of the fact that if i'm able to bring down the fiscal deficit by cutting down on capital expenditure
26:07Even though I have space to go up to say three three point one percent
26:11Then is it a case of the states underperforming?
26:14That is something which will have to be studied in detail because it's not possible for one to say it will depend from state to state
26:19As to what really are the reasons for it?
26:22And because it's also been an issue during the course of the year about a transfer of resources from the center to the state
26:27the timing of it so that could be something one of the reasons as to why
26:32States have not really been spending that much on capital expenditure. I think lots of them tend to fall back
26:37I realized they've done it for 22 23 and I think for 23 24 number of them have fallen short of it
26:42But that's probably something which can be taken up
26:44But I think fundamental thing is that if you're the first thing in goal should be to ensure that you're within this three percent mark
26:50Which I think is a very positive
26:52development
26:54Right. Uh, so, uh, mr
26:55Joshi coming back to you, uh, the eco survey also does say that in the medium term the indian economy can grow
27:03At a rate of seven percent plus on a sustained basis
27:08If we build on the structural reforms undertaken over the last decade
27:12This requires a tripartite compact between the union government state governments and the private sector. That's according to the economic survey
27:20So about seven percent
27:22Or over seven percent. That's roughly what the economic survey
27:27Uh expects the potential growth rate to be in the medium term
27:31Is that broadly aligned to your estimates as well?
27:36And also is that an adequately high?
27:40pace of growth for the indian economy
27:43Well, I think there is a on the adequately high
27:45I think we would love to have eight percent growth on a sustained basis
27:49but you have to see whether you are I mean you have the ability to grow at that rate without
27:54Without generating inflation and without generating other macroeconomic
28:00Instability so I mean our outlook is that till the end of this decade
28:05Uh, we will be able to grow at six point seven percent per year
28:10Which will take india to a seven trillion economy by 2030 31 and it will raise the per capita income to the upper middle
28:17Income category by that time. So that is I think so
28:21Again, we are slightly lower than seven percent
28:23uh, but uh
28:25broad not not very different from what uh, what uh, what the the economic survey is saying but also
28:31Remember, I think there is a condition attack. I think they are saying that we need to do reforms etc
28:37Only then we'll be able to sustain that so we have taken a base case
28:40I think if you accelerate the pace of debottlenecking
28:43Uh, if you accelerate if the private investment, uh also picks up
28:47right now, I think we are in a very good condition where
28:51The lender and the borrower both have both are in good health
28:54I mean banks have low npas and the corporate sector has low
28:58low gearing I mean so they can
29:01They they are in a position to borrow and you also have lender who's in a position to lend I think
29:07So clearly there are there are some
29:10Things which already fit into this story the rest
29:14Upside to what we are saying can be created by accelerating the reform
29:18So I I think it's it's broadly in line with the with the with what what we are and looks fairly realistic
29:24I mean at this juncture
29:26Uh, you know, this has been talked about quite a bit in the recent past
29:31Most recently you had the SEBI chairperson on friday talk about
29:35participation of retail in the equity markets and in fact
29:40The economic survey also alludes to it. I'm reading a section of the economic survey
29:45It says that while the outlook for india's financial sector appears bright some areas will require focused attention going forward
29:54The significant increase in retail investors in the stock market calls for careful consideration
30:00this is crucial because the possibility of overconfidence leading to speculation and the
30:06Expectation of even greater returns which may not align with the real market conditions is a serious concern
30:12For a developing economy such as india the financial sector needs to support the banking sector and fill the gap
30:19In capital required for the economy's growth. I'm going to pause there, but it's an interesting
30:25Statement that is being made ahead of the presentation of the budget mother
30:30I'm curious about what you make of this because we're talking about financialization of assets
30:35We're talking about a huge influx of capital into the equity markets from the retail
30:41Investor here in india and a deviation of capital banks are struggling with deposit growth and
30:47Some projections the rbi governor also talking about money moving from fixed deposits and from bank deposits
30:53into equity and equity instruments
30:57Is that something that can pose a little bit of a challenge going forward?
31:02In fact, I would say it's a major challenge because today if you're looking at the banking system
31:06I think almost all banks are coping with this particular challenge of
31:11garnering deposits because if you look at
31:14Overall deposits, I think the rate of growth has definitely slowed down in the last one year or so
31:19Funds are going into mutual funds funds are going into the equity market directly because the returns are definitely more competitive
31:26and
31:27Given the fact that the interest rates have actually peaked as far as the banking system is concerned
31:33As a deposit holder, you cannot really expect to get across the board higher interest rates
31:37And today when you're looking at the stock market, which is doing very well
31:40There is an incentive for one to go and invest on this particular market
31:44So in fact, if you look at an interesting statistic is that in this current financial year
31:49Almost all the ipos which were listed had listed at a much higher price than their issue price on the day of listing
31:56So there were substantial gains to be made now
31:58I think this kind of development is something which is very positive for the capital market
32:02But it's also a case of saying that you have individual investors are rushing to it saying, okay the sensex is 80 000
32:08We have expectations that the Indian economy is the fastest growing economy
32:11People are talking about 5 trillion 7 trillion 10 trillion dollars
32:15So therefore 80 000 will become 90 000 maybe in another year's time if not earlier
32:19So I think this is something which both SEBI as well as the economic survey is warning saying that if we see such a thing
32:25happening a we could see that
32:27retail investors who are investing without too much of knowledge of the markets could have a setback and then that could have
32:33a spiral like repercussion downwards and second point of view of the economy as such
32:39I think we look at the contribution of banks towards growth
32:42It's definitely something which is very much direct because today if i'm going to invest in the secondary market
32:48It's just a case of my money going to you and you're you're you're you're paying me and i'm and i'm receiving the shares
32:54There's no actual investment or
32:57Financing of investment which is taking place the same money kept in the bank is going for lending purposes
33:02Or it's going for investments and government securities, which is using it for financing the the budgetary deficit
33:08So I think there is a productive chain which is out there
33:11So I think this is the major concern as long as the money is going in for a productive activity
33:15You can be sure that okay. It's going through a bank or it's going through a mutual fund
33:20There is some kind of
33:21Contribution to the general economic growth, but if it's going purely from the point of view of speculative
33:27Investments there could be an issue especially if the large number of funds are moving out banks are left with
33:33Fighting to get funds to fund the kind of credit which we're looking at. They will definitely take kind of a
33:39Challenge for the economy as well. I think that's what's being highlighted
33:43And in fact it goes on to say and the statement that it makes is quite
33:47Stark it says the financial sector should expand at a pace that is in lockstep with economic growth
33:55In particular india can ill afford the economy's over financialization
33:59At its current development stage
34:03Right, uh, mr. Sabnavis, I do want to ask you about inflation. So among
34:10A lot of
34:11Highlights that the economic survey has on inflation one of the points it makes is that the medium to long-term inflation
34:18Outlook will be shaped by the strengthening of price monitoring mechanisms and market intelligence
34:24And beyond that focused efforts to increase domestic production of essential food items
34:31Like pulses and edible oils over the past year or actually more than that
34:37We have seen pulses inflation almost consistently
34:40Remain elevated in case of edible oils. We did have a phase where we saw a prolonged period of high inflation there
34:48Currently, of course, we're in a phase where we're seeing deflation
34:52In edible oils, but going forward as well are these
34:56commodities specifically
34:59expected to remain sort of
35:02Fragile for india given our high
35:05Dependence on exports in case of both of these or do you think there is any change taking place domestically here?
35:14No, I think there's a major problem in agriculture
35:16And hopefully the economic survey has recognized that we need to have reforms in the agricultural sector
35:22So far we have been talking of reforms. It's more related to industry and services, but not really to agriculture
35:27We need to change the overall structure of agriculture to make it more commercial to make it more productive
35:32And what you mentioned is absolutely right in terms of pulses
35:35We seem to be having a perennial problem
35:37Because we look at the overall cost of cultivation the risk which you have for the monsoon being good and not being that good
35:43Access to irrigation being very much limited. We have actually seen that farmers would no longer like to grow crops like pulses
35:50It's much better to grow rice and wheat where you have an msp
35:53And you also have a case of saying that there is a back-end procurement, which is a front-end procurement
35:57Which is there as far as the government is concerned
36:00For edible oils what we've seen is that the production is not to the same level
36:03But since we import around 55 to 60 percent of our requirements
36:06The prices seem to be guided by what happens in international markets
36:09So if the price is cooled and even our import price comes down and we've gotten a benefit
36:13In the last financial year with this year, but pulses will continue to be an issue for us
36:19Unless we're able to increase it, but that cannot be done by the government because these are private decisions taken by farmers
36:25All right, thank you so much. Mr. Sabnaviz and Mr. Joshi for taking time out
36:30But that's some of the key takeaways from the economic survey
36:35Alex, of course, one of the bigger takeaways from the survey has been the government pegging
36:41GDP growth for the ongoing fiscal at anywhere between six and a half to seven percent
36:45With medium-term growth prospects at about seven percent or upwards of that
36:51Absolutely and i'd be very keen to find out what the finance minister
36:54Has to say about that GDP growth for the current financial year when she presents the budget tomorrow
36:59Just a quick reminder to you before we end this program
37:02We will be live through the day and of course you can find all of the live action on the budget
37:08As well as the analysis and the interpretation of the fine print right here on NDTV profits. So do stay tuned
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