Rakesh Jhunjhunwala - on India Economy

The Indian economy will bounce back much faster and more vigorously than most people anticipate. This will be driven by swift upswing in domestic demand, according to Mr Rakesh Jhunjhunwala, equity and investment guru.

“This bounce up will be much faster than other economies. We may potentially hit 10 per cent growth rate even before economies like the US and those in the Europe struggle to achieve even 1 to 1.5 per cent growth,” he said.

Mr Jhunjhunwala said the prices of automobiles, white goods and commodities will be slashed further to help shore up sales and activate local consumption. Measures by the Government and RBI will ease up liquidity.

Speaking on the economic scenario, problems and prospects here late on Friday, he reiterated he continues to be bullish and the issue is about looking at the long-term prospects as these are patches of slowdown. Therefore, this offers opportunities to invest. Banking is one sector to watch out for, he said.

“Interest rates will come down further with the possibility of deposit rates hovering around 6 per cent and lending rates at 9 per cent. This will spur demand,” he added.

“We need fiscal measures which have greater bearing on the economy than merely addressing liquidity issues.”

The rupee will strengthen and possibly go up to Rs 45 versus the dollar. Software sector is “like a joker in the pack”. Unlike general exports, the impact of software exports has greater bearing on the Indian economy as it is also a major job creator.

When asked where to invest now, he said “the market is like harem; one can pick and chose from the plenty of options available.”

Asked about his investment patterns, he said that there is no pattern and advised people not to invest based on tips as it is a truly successful recipe for doom. “Of the 6,000 listed companies, more than 5,500 do not merit consideration. Once you select 500, you will need to narrow down sector wise and pick and choose based on their earning potential.”
CORPORATE GOVERNANCE

“No company is managed by independent directors. Every company is managed by promoters. So when promoters make a mistake, you cannot blame the independent directors,” he said, referring to the recent issue of corporate governance cropping up in the Satyam-Maytas deal.

“Keep aside what the media says on the deal. What the promoters did need to be assessed in different perspective. If the promoters had done a proper valuation and subjected the entire issue for discussion before shareholders, the issue would have been viewed differently.

“If all the credit went to promoters for good things all these years, now why blame the directors.”

Most of the Indian companies have good corporate governance, he added. In fact, several large global corporations, which have well-trained managers as independent directors have had worst issues.