This is ICICI Chairman, KV Kamath’s views on the Modi Govt 1 yr since coming to power

Prime Minister Narendra Modi-led Indian Government will complete one year in office this month and many investors and corporate are already assessing the work done by the Centre. In an exclusive interview to the Economic Times, ICICI Bank Chairman, KV Kamath, says it will be incorrect to say that Modi government did not do anything substantial in last one year, adding that certainly more work was needed to be e done as per the promise made during the Lok Sabha polls.

Kamath said that progress was made on three fronts-land issues, environment and mineral rights and natural resources.

“There were two or three things that needed to happen. One was clarity on land issues and that is a work in progress. Clarity on environment and the ministry certainly is in a position to take decisions, and I am not hearing anything negative on that front. Third issue was mineral rights, natural resources — things that the government ownsThe only place where the decision has yet to be taken is on the gas front...To me, these were key things that were hurting business and the ability of an entrepreneur to actually put a project on the table,” he said.

He also mentioned that growth was not happening in the manufacturing side due to which companies were not investing.

Kamath added that issues in infrastructure side were needed to be addressed for attracting investments.

“On the infrastructure side there is a whole lot of issues which need to be addressed before they could invest. I would say, a lot of other issues have come up in infrastructure projects because they have not gotten off the ground,” he told the financial daily.

He further said project completion is not happening, adding these were compounding the challenges and mentioning two important things — action by the government and the bottom line. There are ways to achieve target, he said, adding “you should have had faith in the global positioning that India is having under this Prime Minister. You should have faith that the legal action, wherever required, is being taken on a whole host of issues and they are being addressed”.

When asked about ministries not being empowered and over centralisation at the Prime Minister Office, he said, “No. I am not seeing that sense at all. I think we have a strong Centre which is as it should be. But, I have not heard anything that the ministries are not able to act. Decisions are taken at the ministries' level.”

Talking about the mood and less hope in corporate earnings, Kamath said there were two parts to it, corporate earnings and corporate investment. “Corporate earnings… hampered by clearly on the manufacturing front; growth in terms of demand is not at the expected level,” he said.

“In terms of infrastructure, it is clearly reflected in the whole issue of new investment not happening. In manufacturing, very large projects can kick-start a project in new capacity creation in 12 to 18 months... On the infra front, I am not seeing new projects or the interest as we would need for an economy which is set to provide 8% to 10% growth,” he added.

Commenting about the Reserve Bank of India which has cut interest rate by 50 basis points, Kamath said:,“Over the next one year if you can see a 200 basis points-plus cut, then you will see (demand)... because less than that is not going to be meaningful.”

Kamath said he was not asking the RBI to cut as much. “I am saying that for the growth momentum to be noticeable you will need that sort of a cut in terms of interest rates to make the EMI actually (lower) and it will move the needle,” he told the ET.

Coming to infrastructure, Kamath said the government has to be a key player in terms of investment in infrastructure. “In the private sector, what I would expect is that leverage players clearly will not be the future. It will have to be only players with the balance sheet who will need to push this agenda. There are players who would have earlier sat out on this. It has to be players with the balance sheet who will drive this. There is another interesting opportunity, which is all the assets in distress,” he said.

Commenting about the bad promoters who are losing their empire, he said this will be the first time it will really be happening, but it will be probably in the banks' interest to make the assets productive, which are unproductive and they will work out an appropriate modality for that.

(Image: India Times)