Experts bank on NBFCs, gold loan cos at economic summit

Experts at the panel discussion titled “India Market Watch 2012” said that growth in the Indian economy is being driven by consumption arising from a confluence of factors: a rising middle class, increasing urbanisation and favourable demographics and as a result, retail and consumer goods and financial services have been among the most favoured sectors for investors. Even as the main investment themes remain the same, experts view some new pockets of growth also available now such as education, healthcare, e-commerce, information technology and insurance.

Infrastructure touted as a “must-invest” sector in the past, actual investments have not been as high as expected, Morgan Stanley India Chairman (Investment Banking Division) VK Bansal said, pointing out ports, in particular, had not seen enough investments, though there was opportunity in that segment.

ICICI Bank Managing Director Chanda Kochhar said the banking sector will be the catalyst of India’s growth story as “The Indian banking system remained resilient in the 2008 crisis.” She conceded that no country is decoupled from the deleveraging happening globally and India will be no different.

Taking a contrarian view, Rahul Gupta, head of global India capital markets group at law firm Clifford Chance, said he was pessimistic about investing in India in the short term, while pointing out that foreign investors are not talking about multi-billion dollar investments anymore.

He listed out high inflation, higher interest rates, policy stagnation and high current account deficits are factors which could be blamed. In this context, Kochhar said India will have to focus on supply instead of controlling consumption.

 “High inflation needs to be tackled by increasing supply,” she added.

However, the panelists were unanimous that the long-term story for India remained intact, while the short-term looked bleak. No one is clear on how long the short term will last.