What is your view on the markets, as in where is the Sensex headed?
It would be foolish to predict the market. But the mindset is better. We are in a situation where the view of achieving a 6.0-6.5% growth is possible in the immediate run under the leadership of Narendra Modi. Of this, 100 bps will be merely due to change in leadership.
How can a mere change in leadership account for growth when fundamentally things need to improve, inflation for example...
We are in near double digit inflation. It is highly unimaginable for a country where over 54% of the land is arable, and there is still shortage of food. The crop potential is highest compared to China or US. We can be at the top of the world if the food problem is tackled efficiently. Inflation is the first thing that will be on the government's agenda because it protects the poorest. The rich need not bother where the food prices are headed. It is surprising to see a country where majority of the population are vegetarians and one cannot afford to eat vegetables.
What needs to be done then?
I am not the right person to speak about inflation. But going by the past, we seem to be not addressing core issues hitting food production. Food can't be a problem if tackled efficiently. One can relook at crop farming or innovative practices to improve yield or some kind of a cooperative movement to ensure fair pricing as the country has large tracts of cultivable land. A change in leadership has sent a strong message to hoarders of foodgrains and now these guys are a worried lot. This is one aspect of having a strong leader, the fear of being jailed if you were on the wrong side of the law. The same would be the case with corporates too.
What could be the three top priorities to improve the investment climate in the country?
We already have an efficient central banker and now a strong prime minister in Narendra Modi. The third priority is to have an able finance minister who would look at fiscal measures and give the Reserve Bank of India a free hand on monetary issues.
What would be the issues they need to address first?
Agarwal: Inflation, corruption and infrastructure. Corruption is now so widespread that nothing moves without greasing the palms of officials. I won't be surprised if under the new government some corporate czars too go behind the bars.
What policy changes are you looking at by the new government?
Agarwal: There is a differentiation in leadership now. The mere presence of a strong leader has made the financial markets buoyant and foreign investors are pumping money into the markets. The rupee has emerged stronger, and the 10-year bonds are showing signs of easing (from earlier 9.1% last month to the current 8.7%). India is a dark horse and has the choice of deciding how big the country would like to be.
We must have mega capex plans for infra, rails and ports. I am surprised to see our cities have worldclass offices and residential complexes but horrible roads. We have issues related to land acquisition, execution of projects, and environmental bottlenecks which all are hurting growth.