Prime Minister Narendra Modi has got a big thumbs up from HDFC chairman Deepak Parekh. Deepak Parekh said, “India is on an extremely strong wicket with a strong leadership at the helm.” “India has never been in a stronger macro position than today,” he added. While acknowledging that the bidding for major projects has become transparent in India, Parekh added that the private sector capex has continued to be slow. Stating that India has benefited “tremendously” from the low global oil prices, Parekh said, “India needs to focus on attracting long-term FDI.”
Parekh cautioned that India may see a “massive” outflow of capital if there is a proper hint from the US Federal Reserve of rising interest rates. “We saw an outflow of over $3-4 billion earlier this year in India,” Parekh added. According to Parekh the excess liquidity due to QE (Quantitative Easing) has found its way into stock markets. Parekh’s comments come in the backdrop of US Federal Reserve chief Janet Yellen saying that the case for rate hike could get stronger. Yellen has offered a sobering dose of uncertainty for monetary policy and the global economy by suggesting that interest rates could rise faster than expected in coming months or just as easily crater back to zero.
Parekh had recently said that the Modi government’s choice of Urjit Patel as the new RBI governor is “excellent”. “I think he (Urjit Patel) is an excellent choice, he’s the right choice, because it means continuity in RBI policy, stability in the system,” Parekh had told CNBC-TV 18. “I think the government needs to be complimented for selecting such a good candidate,” Parekh had said.